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Papua New Guinea Consolidated Legislation |
No. 49 of 1998.
Oil and Gas Act 1998.
Certified on: / /20 .
INDEPENDENT
STATE OF PAPUA NEW GUINEA.
No. 49 of 1998.
Oil and Gas Act 1998.
ARRANGEMENT OF SECTIONS.
1. Compliance with constitutional requirements, etc.
2. Application of provisions of Organic Law on Provincial Governments and Local-level Governments.
3. Interpretation.
4. Declaration of low water line.
5. Application.
6. Petroleum the property of the State.
7. The Director may carry on operations.
8. Exploration for and recovery of petroleum.
9. Laws of Papua New Guinea to apply.
10. Jurisdiction of courts.
11. Appointment of Director.
12. Delegation.
13. Petroleum Advisory Board.
14. Meetings of the Board.
15. Powers and duties of Board.
16. No personal liability for Board, Minister or Director.
17. Graticulation of Earth’s surface and constitution of blocks.
18. Prospecting licences under Torres Strait Treaty.
19. Issue of licences.
20. Reservation of blocks.
21. Applications for petroleum prospecting licence.
22. Form of application for petroleum prospecting licence.
23. Grant or refusal of petroleum prospecting licence.
24. Variation of petroleum prospecting licence.
25. Rights conferred by petroleum prospecting licence.
26. Term of petroleum prospecting licence.
27. Application for extension of petroleum prospecting licence.
28. Application for extension to be in respect of reduced area.
29. Grant or refusal of extension of petroleum prospecting licence.
30. Extension of petroleum prospecting licence in respect of location.
31. Conditions of grant of petroleum prospecting licence.
32. Discovery of petroleum to be notified.
33. Directions by Minister on discovery of petroleum.
34. Declaration of location.
35. Investigation, etc., of location.
36. Revocation of declaration of location.
37. Application for petroleum retention licence.
38. Form of application for petroleum retention licence.
39. Notification of grant of petroleum retention licence.
40. Grant or refusal of petroleum retention licence.
41. Variation of petroleum retention licence.
42. Rights conferred by petroleum retention licence.
43. Term of petroleum retention licence.
44. Application for extension of petroleum retention licence.
45. Grant or refusal of extension of petroleum retention licence.
46. Conditions of petroleum retention licence.
47. Social mapping and landowner identification studies.
48. Development forum.
49. Matters required before development forum.
50. Development agreement.
50A. Coordination of benefits for Gas Projects.
51. Power to sign development agreement.
52. Consultation with affected Local-level Governments and affected Provincial Governments.
52A. Coordination of development forum.
53. Application for petroleum development licence.
54. Form of application for petroleum development licence.
55. Notice of application to be provided to the Company, etc.
56. Notification of grant of petroleum development licence.
57. Grant or refusal of petroleum development licence.
58. Variation of petroleum development licence.
59. Rights conferred by petroleum development licence.
60. Term of petroleum development licence.
61. Application for extension of petroleum development licence.
62. Grant or refusal of extension of petroleum development licence.
63. Conditions of petroleum development licence.
64. Unit development.
65. Co-ordinated petroleum developments.
66. Directions as to recovery of petroleum.
67. Domestic market obligation.
68. Processing of natural gas.
69. Export of natural gas.
70. Pipeline licence required.
71. Acts done in an emergency.
72. Removal of pipeline.
73. Application for pipeline licence.
74. Grant or refusal of pipeline licence.
75. Strategic pipelines.
76. Rights conferred by pipeline licence.
77. Term of pipeline licence.
78. Application for extension of pipeline licence.
79. Grant or refusal of extension of pipeline licence.
80. Conditions of pipeline licence.
81. Variation of pipeline licence on application by licensee.
82. Variation of pipeline licence by Minister.
83. Common carrier.
84. Ceasing to operate pipeline.
85. Petroleum processing facility licence required.
86. Application for petroleum processing facility licence.
87. Form of application for petroleum processing facility licence.
88. Grant or refusal of petroleum processing facility licence.
89. Strategic petroleum processing facilities.
90. Rights conferred by petroleum processing facility licence.
91. Term of petroleum processing facility licence.
92. Variation of petroleum processing facility licence on application by licensee.
93. Variation of petroleum processing facility licence by Minister.
94. Conditions of petroleum processing facility licence.
95. Regulations for domestic utilisation business.
96. Register to be kept.
97. Approval and registration of transfers.
98. Entries in Register of devolution of title.
99. Interests not to be created, etc., except by instrument.
100. Approval of instruments creating, etc., interests.
101. True consideration to be shown.
102. Minister not concerned with certain matters.
103. Power of Minister to require information as to proposed dealings.
104. Production and inspection of documents.
105. Inspection of Register and documents.
106. Evidentiary provisions.
107. Register may be rectified.
108. Minister or Director not liable for certain actions.
109. Offences.
110. Rights of tenement holders in respect of land and property.
111. Rights of pipeline licensees in respect of land and property.
112. Rights of petroleum processing facility licensees in respect of land and property.
113. Rights of landowners.
114. Interference with other rights.
115. Responsibility to repair damage.
116. Additional rights of entry.
117. Land occupied to be surveyed.
118. Compensation.
119. Wardens.
120. Acquisition of land.
121. Determination of customary land.
122. Trespass on land held under a licence.
123. Date of effect of licences, etc.
123A. Designation of Operator and Operating Agreement.
124. Work practices for tenement holder.
125. Work practices for pipeline licensee.
126. Work practices for petroleum processing facility licensee.
127. Work practices for holders of instruments of consent.
128. Penalty for breach of Section 124, 125, 126 or 127.
129. Local purchase obligation.
130. Measurement and metering.
131. Maintenance, etc., of property.
132. Drilling near boundaries.
133. Directions.
134. Compliance with directions.
135. Exemptions, variations, etc.
136. Prevention from carrying on prospecting operations.
137. Surrender of licences.
138. Suspension and cancellation of licences.
139. Removal of property, etc., by licensee, etc.
140. Removal and sale of property.
141. Penalty for late payments.
142. Securities.
143. Further information to be furnished, etc.
144. Failing to furnish information, etc.
145. Drilling for and discovery of water.
146. Survey of wells, etc.
147. Records, etc., to be kept.
148. Reporting by licensees.
149. Confidentiality, etc., of information.
150. Scientific investigations: Instruments of consent.
151. Inspectors.
152. Powers of inspectors.
153. General penalty.
154. Continuing offences.
155. Orders for forfeiture in respect of certain offences.
156. Service.
156A. Pre-submission of information.
157. Fees.
158. Determination of value of petroleum.
159. Royalty.
160. Development levies.
161. Ascertaining quantity of petroleum recovered.
162. Payment of royalty and penalty for late payment.
163. Registration fees.
164. No effect on compensation entitlement.
165. State equity entitlement.
166. Acquisition of participating interest by the Company.
167. Equity benefit.
168. Royalty benefit.
169. Identification of landowner beneficiaries.
169A. Identification of Landowners beneficiaries and sharing of benefits in relation to existing Petroleum Projects.
170. Sharing of benefits amongst project area landowners.
171. Other project area landowner benefits.
172. Sharing of benefits amongst affected Local-level Governments and affected Provincial Governments.
173. Project grants.
174. Limitation on project benefits.
175. Additional interests in petroleum projects.
176. Project benefits trusts.
177. Benefits where pipeline or petroleum processing facility not part of petroleum project.
178. Expenditure on behalf of affected Local-level Governments and affected Provincial Governments.
179. National Gas Corporation.
180. Inspectors not to have any interests in licences, etc.
181. Points, etc., to be ascertained by reference to geodetic datum.
182. Regulations.
183. Petroleum agreement.
184. Gas agreement.
185. Agreements by the State.
186. Repeal.
187. Licences under former Act.
188. Pipeline licences under former Act.
189. Existing or proposed petroleum processing facilities.
190. References to former Act, etc.
INDEPENDENT STATE OF PAPUA NEW GUINEA.
AN ACT
entitled
Oil and Gas Act 1998,
Being an Act to enact comprehensive legislation governing the exploration for and production of petroleum (including oil and gas) in Papua New Guinea, including the offshore area, and the grant to traditional landowners and Provincial Governments and Local-level Governments of benefits arising from projects for the production of petroleum (including oil and gas), and the processing and transportation in Papua New Guinea of petroleum and petroleum products, and to repeal various Acts, and for related purposes.
PART I. – PRELIMINARY.
1. COMPLIANCE WITH CONSTITUTIONAL REQUIREMENTS, ETC.
(a) Section 44 (the freedom from arbitrary search and entry); and
(b) Section 48 (the right to freedom of employment); and
(c) Section 49 (the right to privacy); and
(d) Section 51 (the right to freedom of information),
is a law made for that purpose, taking into account the National Goals and Directive Principles and the Basic Social Obligations, in particular the National Goals and Directive Principles entitled–
(e) national sovereignty and self reliance; and
(f) natural resources and environment,
for the purpose of giving effect to the public interest in public order and public welfare.
(2) For the purposes of Section 53(1) (protection from unjust deprivation of property) of the Constitution and the Land Act 1996, and any other relevant law, the purpose and reason for which this Act permits possession to be compulsorily taken of any property and permits any interest in or rights over property to be compulsorily acquired are set out below and are declared and described to be a public purpose, whether pursued by a licensee, the State or any other person exercising rights under this Act, and to be a reason that is reasonably justified in a democratic society that has a proper regard for the rights and dignity of mankind–
(a) the conducting of geological surveys, seismic tests, test drilling and other prospecting operations for petroleum in a licence area; and
(b) the drilling for and the recovery of petroleum in a licence area; and
(c) the storage of petroleum or petroleum products in connection with the operations of a licensee; and
(d) the processing of petroleum or petroleum products by a licensee; and
(e) the conveyance of petroleum or petroleum products by a licensee, whether by pipeline, land transport, sea transport or air transport, including the pumping, loading, unloading and discharging of petroleum or petroleum products; and
(f) the accommodation of the officers, agents and employees of a licensee or any contractor or sub-contractor of a licensee in connection with the prospecting for, recovery or conveyance or processing of petroleum or petroleum products; and
(g) the disposal of waste material from operations for, or associated with prospecting for, recovery or conveyance or processing of petroleum or petroleum products; and
(h) the establishing of a town to service an industry for the recovery, conveyance or processing of petroleum or petroleum products including civic, cultural and social facilities in the town; and
(ha)[1] the construction, maintenance or operation of facilities (including, without limitation, access roads, docks, ports, airports, marinas and accommodation) to be used by a licensee in connection with the prospecting for, recovery, conveyance or processing of petroleum or petroleum products; and
(i) the acquisition of land or other property for activities in connection with the above purposes; and
(j) the acquisition of a participating interest in a petroleum project in accordance with Part IV.
(3) For the purposes of Section 53(2) of the Constitution, this Act is expressed to be made and each of the activities described above in Subsection (2) is expressed to be in the national interest.
(4) For the purposes of–
(a) Section 29 of the Organic Law on Provincial Government; and
(b) Section 41 of the Organic Law on Provincial Governments and Local-level Governments,
it is declared that this Act relates to a matter of national interest.
2. APPLICATION OF PROVISIONS OF ORGANIC LAW ON PROVINCIAL GOVERNMENTS AND LOCAL-LEVEL GOVERNMENTS.
(a) establishes the benefits and levies which are payable pursuant to Subsection (2) of that section in respect of petroleum projects; and
(b) provides for the rates, management, sharing arrangement and application of such development levies; and
(c) establishes the trust funds referred to in Subsection (3) of that section for the controlling and distribution of development levies.
(2) For the purpose of Section 99 of the Organic Law on Provincial Governments and Local-level Governments it is hereby declared that this Act establishes the principles by which the National Government and its statutory agencies will share with applicable Provincial Governments and Local-level Governments the revenues of the National Government generated from petroleum projects.
(3) For the purpose of Section 116 of the Organic Law on Provincial Governments and Local-level Governments it is hereby declared that this Act establishes–
(a) the consultation process amongst stakeholders, including the establishment and procedures for development forums, for petroleum projects; and
(b) the extent to which the parties may participate in petroleum projects.
3. INTERPRETATION.
“access arrangements” means the access arrangements applying to strategic pipelines which are referred to in Section 75, or the access arrangements applying to strategic petroleum processing facilities which are referred to in Section 89, as the case may be;
“affected Local-level Government” means, in relation to a petroleum project, a Local-level Government within whose geographic jurisdiction lies a dedicated project facility of that petroleum project or any part of a petroleum development licence the production of petroleum from which is part of that petroleum project;
“affected Provincial Government” means, in relation to a petroleum project, a Provincial Government within whose geographic jurisdiction lies a dedicated project facility of that petroleum project or any part of a petroleum development licence the production of petroleum from which is part of that petroleum project;
“annual fee” means a fee prescribed by Subsection 157(2);
“approved” means approved by the Minister;
“arbitration” means arbitration under the Arbitration Act 1951 or, where the Minister or the State and a licensee have agreed to substitute some other form of arbitration for that Act, that other form of arbitration;
“authorized officer” in relation to–
(a) the doing of any act; or
(b) the exercise of any power or function; or
(c) the performance of any duty,
means the officer authorized in writing by the Minister for that purpose;
“block” means a block constituted as provided by Section 17;
“the Board” means the Petroleum Advisory Board established under Section 13;
[3][4]“buffer zone” means, in relation to a petroleum project, the area around the dedicated project facilities of that petroleum project determined by the Minister to be the buffer zone for that petroleum project, but does not include land within a petroleum development licence pursuant to which the petroleum project is conducted or any land not within five kilometres of a dedicated project facility;
“the Chief Inspector” means the Chief Inspector appointed under Section 151(1);
[5]“the Chief Warden” means the Chief Warden appointed under Section 119(1)(a);
“commence to construct” means any clearing of land, excavation, construction or other action at the site for the purpose of constructing any petroleum processing facility, but does not include temporary use of sites for less than 90 days, conducting tests, taking samples or borings, preparing plans and designs, contracting for the fabrication of equipment and improvements, or the legal occupation of land;
“commencement date” means the date of coming into operation of this Act;
“the Company” means Orogen Minerals Limited;
[6]“Customary land” means the land that is owned or posssed by an automatic citizen or community of automatic citizens by virtue of rights of proprietary or possessory kind that belonged to that citizen or community and arise from and are regulated by custom;
[7]“customary land owner” means a person who has an interest in customary land.
“dedicated project facility” means, in relation to a petroleum project–
(a) a pipeline; or
(b) a pipe or system of pipes referred to in Paragraphs (a) to (d) inclusive of the definition of “pipeline”; or
(c) a petroleum processing facility; or
(d) any other facility used exclusively by the tenement holder or other person in carrying on that petroleum project,
the operations of which are part of the same “petroleum project” or “designated gas project” as those terms are defined in the Income Tax Act 1959, but does not include a facility which is excluded as a dedicated project facility by an instrument signed by the Minister;
[8]“Department” means the Department responsible for petroleum matters;
“development agreement” means, in relation to a petroleum project, a written agreement between–
(a) the State; and
(b) the project area landowners, affected Local-level Governments or affected Provincial Governments of the petroleum project, or any of them, as the case may be;
[9]“development forum” means, in relation to a petroleum project or a proposed petroleum project, a meeting or combination of meetings convened in accordance with Section 48;
“the Director” means the Director appointed under Section 11;
“document” includes any map, book, record, or writing;
“domestic gas operator” means a person who connects, installs or repairs equipment and appliances for the purpose of the combustion of gas for domestic utilisation, other than a portable gas appliance that is designed to have within it, or attached to it, its own source of gas;
“domestic gas supplier” means a person who supplies in Papua New Guinea by pipeline or in cylinders or other containers natural gas or liquefied petroleum gas for domestic utilisation;
“domestic utilisation” means the consumption or distribution of petroleum or petroleum products as a fuel or feedstock within Papua New Guinea;
“drilling” means the perforation of the earth’s surface whether the hole is vertical, inclined, or horizontal and includes–
(a) all operations for preventing the collapse of the sides of the hole or for preventing the hole from becoming filled by extraneous materials (including water); and
(b) the fitting of wellheads, coring, and logging;
“equity benefit” means, in relation to a petroleum project, a 2% participating interest in that petroleum project, free of encumbrances or liabilities as at the commencement of commercial production of petroleum from that petroleum project;
“Expenditure Implementation Committee” means a committee established in accordance with Subsection 178(2);
“flow lines or gathering lines” means pipes or a system of pipes for one of the uses referred to in Paragraphs (a), (b) and (c) of the definition of “pipeline”;
“former Act” means the Acts repealed by Section 186;
“gas agreement” means an agreement referred to in Section 184;
[10]“gas field” means a petroleum pool consisting, in some part, of petroleum recoverable as natural gas at the surface where oil recovery is not, or is not expected to be, the primary object of petroleum recovery;
[11]“gas operations” means petroleum operations relating to the recovery from a gas field;
“gas project” means–
(a) where a gas agreement does not apply to a project–a petroleum project having the purpose of recovering natural gas (other than recovery of natural gas which is incidental to the recovery of other petroleum); and
(b)[12] where a gas agreement applies to the project – a petroleum project, as and to the extent defined in such gas agreement, having the purpose of recovering: –
(i) natural gas; and
(ii) other petroleum which is incidental to the recovery of natural gas or which is otherwise dealt with in or the subject of that gas agreement;
“good oilfield practice” means practice which is generally accepted within the petroleum industry as good and safe–
(a) in the carrying on of exploration for petroleum; or
(b) in operations for the recovery of petroleum,
as the case may be;
“graticular section” means a section referred to in Section 17(1);
“improvements” means–
(a) any building or structure; or
(b) any yard, fence, wall or other erection, construction or appliance affixed to land–
(i) for the working or management of the land or of stock depastured on the land; or
(ii) for maintaining or increasing the natural capacity of the land to produce or to give shelter or enjoyment to humans or animals; or
(c) any planted crop or trees, whether planted for commercial or domestic purposes,
and includes–
(d) any well, bore, reservoir, spring, dam or other artificial water course or watering place; or
(e) any road, track, footpath, railway, tramway, culvert, bridge or crossing; or
(f) the site of any sports ground, recreation area, sing sing ground, village or community meeting place, burial place or sacred ground;
“incorporated land group” has the meaning given in the Land Groups Incorporation Act 1974;
“in-plant piping” means pipes or a system of pipes referred to in Paragraph (d) of the definition of “pipeline”;
“inspector” means a person appointed under Section 151, and includes the Chief Inspector;
“land” includes the offshore area and the bed of any river, stream, estuary, lake or swamp;
“licence” means–
(a) a petroleum prospecting licence issued under Section 23; or
(b) a petroleum retention licence issued under Section 40; or
(c) a petroleum development licence issued under Section 57; or
(d) a pipeline licence issued under Section 74; or
(e) a petroleum processing facility licence issued under Section 88,
or any of them, as the context requires, and includes any extension of those licences;
“licence area” means the area constituted by the blocks that are the subject of a tenement;
“licensee” means the registered holder of a licence;
“location” means the blocks in respect of which a declaration under Section 34 is in force;
“low water line” means–
(a) the low water line on a coast of Papua New Guinea at mean low water springs; or
(b) any line declared by the Minister to be a low water line under Section 4;
“major modification” means, in relation to a petroleum processing facility–
(a) installation of new processing units or debottlenecking of existing processing units which results in an increase of the rated capacity of the petroleum processing facility to more than one hundred and twenty five percent of its original design capacity; or
(b) the installation of new facilities or modification of existing facilities costing in excess of 30% of the replacement cost of the petroleum processing facility; or
(c) any other modification to the petroleum processing facility involving a fundamental change to the process or the petroleum products produced by the petroleum processing facility;
“month” means the period from and including a day in one calendar month to and excluding the corresponding day in the next calendar month and including the last day in the next calendar month if there is no corresponding day;
“MRDC” means Mineral Resources Development Company Pty Limited;
“natural gas” means fluid obtained from a well which is a gas at standard temperature and pressure and which consists primarily of hydrocarbons;
“NGC” means a company called or to be called National Gas Corporation Limited to be incorporated in accordance with Section 179;
“offshore area” means the area that comprises–
(a) the seabed underlying the waters (if any) between the low water line and the baseline; and
(b) the seabed underlying the territorial sea; and
(c) the seabed adjacent to the coast of Papua New Guinea that underlies the offshore seas to a depth not exceeding 200 m or, beyond that limit, to a depth where the superjacent waters admit of the exploitation of the natural resources in the subsurface or on the seabed of that area;
[13]“operator” means, in relation to a license –
(a) where there is only one registered holder of that license –that registered holder; and
(b) in all other cases –the person, who shall be a licensee, for the time being designated by the operating agreement, in respect of that license as the operator of operations conducted in relation to that licence;
[14]“operating agreement” means, in respect of a license, the agreement executed between the holders of that license and provided to the Director pursuant to Section 123A in relation to that licence.
“option” has the meaning given to it in the option agreement;
“option agreement” has the meaning given to it in the Mineral Resources Development Company Pty Limited (Privatisation) Act 1996;
“Orogen option project” means a petroleum project which is also a Project as defined in the option agreement;
“participating interest” means, in relation to a petroleum project an undivided beneficial interest in all of the project assets of that petroleum project;
“petroleum” means–
(a) any naturally occurring hydrocarbons, whether in a gaseous, liquid, or solid state; or
(b) any naturally occurring mixture of hydrocarbons, whether in a gaseous, liquid, or solid state; or
(c) any naturally occurring mixture of one or more hydrocarbons, (whether in a gaseous, liquid, or solid state) and any other substance,
and includes any processed petroleum, and any petroleum as defined by Paragraph (a), (b) or (c) that has been returned to a natural reservoir, but does not include coal, shale, or any substance that may be extracted from coal, shale, or other rock;
“petroleum development licence” means a licence issued under Division III.7;
“petroleum development licensee” means the registered holder of a petroleum development licence;
“petroleum pool” means a naturally occurring discrete accumulation of petroleum;
“petroleum processing” means refining, separating, stabilising, liquefying, storing, reclaiming, treating, fractionation, cracking, polymerisation, reforming or re-refining of petroleum, or the conversion of petroleum to other petroleum derivates, and all related operations; and “processed”, in relation to petroleum or petroleum products, has the corresponding meaning;
“petroleum processing facility” means a facility, whether onshore or offshore, for petroleum processing, and includes tanks for bulk storage of petroleum or petroleum products and in-plant piping;
“petroleum processing facility licence” means a licence granted under Division III.10;
“petroleum processing facility licensee” means the registered holder of a petroleum processing facility licence;
“petroleum product” means a distillate of petroleum or a reformate or derivate of petroleum;
“petroleum project” means a project in Papua New Guinea for the production of petroleum, and includes, if they are part of the same project or developed in conjunction with the petroleum production development, the construction and operation pursuant to a licence of facilities for the recovery, processing or transportation of petroleum, and a project which is the subject of a licence and over which the Company has the right to exercise an option under the option agreement;
“petroleum prospecting licence” means a licence issued under Division III.2;
“petroleum prospecting licensee” means the registered holder of a petroleum prospecting licence;
“petroleum retention licence” means a licence issued under Division III.4;
“petroleum retention licensee” means the registered holder of a petroleum retention licence;
“pipeline” means pipes and other interconnected facilities operated as an integrated system (including pumping stations, metering stations, valve stations, storage tanks and pig launching and receiving stations) for transporting petroleum or petroleum products from receipt points to delivery points either for petroleum processing within the country or for further processing or export, but does not include pipes and facilities for–
(a) returning petroleum to a reservoir for pressure maintenance or storage or conservation; or
(b) transporting petroleum that is to be flared or vented, or recovered for test purposes under a tenement (including drill stem or extended production tests) and transported to facilities for testing or measurement or disposal; or
(c) gathering petroleum for transportation to petroleum processing facilities within a licence area where all such pipes and transportation facilities are within a licence area; or
(d) transporting petroleum or petroleum products between receipt points and delivery points in a petroleum processing facility;
“pipeline licence” means a licence to construct and operate a pipeline issued under Division III.9;
“pipeline licensee” means the registered holder of a pipeline licence;
“private land” means land other than Government land as defined in Section 2 of the Mining Act 1992;
“processed petroleum” means stabilised crude oil, condensate, processed natural gas that conforms to a quality specification prescribed in a sales contract or elsewhere, liquefied petroleum gas, or liquefied natural gas, or any other petroleum which has been processed but which is not a petroleum product;
[15]“project area landowners” means, in relation to a petroleum project, the persons who are customary land owners or who have registered title to–
(a) any part of the licence area of a petroleum development licence the operations under which are part of that petroleum project; or
(b) any land within the buffer zone of that petroleum project;
“project assets” means, in relation to a petroleum project–
(a) the licence or licences pursuant to which the petroleum project or any part of it is conducted; and
(b) the property, real or personal, present or future, owned or acquired or held for use by or on behalf of the licensee or licensees or other persons affiliated with the licensee or licensees who are carrying out the petroleum project, which is held for the purposes of the petroleum project or any part of it, including all property in dedicated project facilities of the petroleum project; and
(c) the right to receive in kind and to dispose of all petroleum recovered in the course of the petroleum project,
in each case to the extent that such petroleum project is an entire or more than one entire “petroleum projects” or “designated gas projects” as defined in the Income Tax Act 1959;
“project pipeline” means a pipeline which is not a strategic pipeline;
“pumping station” means equipment for pumping petroleum or petroleum products or water and includes any structure associated with that equipment;
“Register” means a Register kept under Division III.11;
“registered holder”, in relation to a licence, means the person whose name is for the time being shown in the Register as being the holder of the licence;
“royalty benefit” means, in relation to a petroleum project, a sum of money each month equal to the amount of royalty payable in the previous month pursuant to Section 159 by a licensee in respect of that petroleum project, less any tax or withholding payable to the State in respect of such royalty upon payment to third persons;
“royalty period”, in relation to a tenement means–
(a) the period commencing on the date on which the tenement comes into effect to the end of that month; and
(b) each month afterwards;
“State equity entitlement” means the entitlement of the State, pursuant to Section 165, to acquire, directly or through a nominee, a participating interest in a petroleum project;
“storage” means the accumulation of petroleum or petroleum products pending transportation to a petroleum processing facility or loading for transportation or sale;
“strategic petroleum processing facility” means a petroleum processing facility directly connected to or directly integrated with a strategic pipeline, either upstream or downstream, but does not include a petroleum processing facility which is exempted under Section 89(7);
“strategic pipeline” means a pipeline referred to in Section 75(1);
“tank station” means a tank or system of tanks for holding or storing petroleum, and includes any structure associated with that tank or system of tanks;
“temporary operations” means any of the following operations:–
(a) geological, geochemical and geophysical surveying;
(b) taking samples by hand or hand held methods;
(c) aerial and land surveying;
(d) transportation of crews and equipment by haul roads, navigable waterways or aircraft;
(e) any activity prescribed by regulation as a preliminary survey,
and any lawful act incidental to any activity to which Paragraphs (a) to (e) relate to the extent that it does not involve any activity that results in surveys of greater than minimum scale and in no circumstances shall include activities involving–
(f) exploring for petroleum; or
(g) the cutting, destroying, removing or injury of any vegetation on greater than a minimum scale; or
(h) the use of explosives, other than for geophysical survey; or
(i) damage to improvements, stock or chattels on any land; or
(j) any breach of the provisions of this or any other Act, including provisions relating to protected native plants, water, noise and historic sites; or
(k) the use of more persons for any particular activity than is reasonably necessary; or
(l) any survey prescribed as a prohibited survey; or
(m) entry on land prescribed as prohibited land;
“tenement” means–
(a) a petroleum prospecting licence issued under Section 23; or
(b) a petroleum retention licence issued under Section 40; or
(c) a petroleum development licence issued under Section 57,
or any of them, as the context requires, and includes any extension of those licences;
“tenement holder” means the registered holder of a tenement;
“this Act” includes the regulations;
“transportation” means the act of delivering petroleum or petroleum products, whether by barge, pipeline, road tanker, ship, drums or other container or otherwise, from a receipt point to a destination point including back hauls, displacement, exchange and in-transit storage;
“valve station” means equipment for regulating the flow of petroleum, and includes any structure associated with that equipment;
“vessel” means a vessel used in navigation, other than air navigation, and includes a barge, lighter or other floating vessel;
[16]“Warden” means a Warden appointed under Section 119(1)(b);
“water line” means a pipe or system of pipes for conveying water to be used in connection with prospecting for, or the recovery of, petroleum;
“well” means a hole in land or the subsoil of land, made by drilling, boring or any other means–
(a) in connection with exploration for petroleum; or
(b) in operations for the recovery of petroleum,
but does not include a seismic shot hole.
(2) In this Act, a reference–
(a) to the term of a licence, is a reference to the period during which the licence remains in force and includes the period of any extension of such licence; and
(b) to the date of expiration of a licence, is a reference to the day on which the licence ceases to have effect.
(3) In this Act, a reference to a year of the term of a licence is a reference to a period of one year commencing on the date from and including which the licence has effect or on any anniversary of that date.
(4) In this Act, a reference to a licence is a reference to the licence as varied from time to time under this Act.
(5) For the purposes of this Act, “Papua New Guinea” includes the offshore area.
4. DECLARATION OF LOW WATER LINE.
5. APPLICATION.
(a) to all natural persons, whether resident in the country or not; and
(b) to all corporations, whether incorporated or carrying on business in the country or not.
6. PETROLEUM THE PROPERTY OF THE STATE.
(2) Nothing in Subsection (1) shall be construed as an additional acquisition of property in relation to Section 53 of the Constitution beyond that which prevailed under the former Act and all previous Acts.
(3) Petroleum and helium shall not be removed from the land from which it has been obtained, or disposed of in any manner, except–
(a) subject to Subsection (4), by a tenement holder, for the purpose of sampling or analysis; or
(b) by a tenement holder in accordance with the terms of his tenement or a written agreement with the State; or
(c) as otherwise permitted by this Act.
(4) A licensee shall not take or send out of the country any samples of petroleum or helium without the written consent of the Director.
7. THE DIRECTOR MAY CARRY ON OPERATIONS.
(2) Where the Director carries on any operations under this section, he has the same rights, benefits, and privileges as a licensee.
(3) Where the Director carries on any operations under this section, he shall to the extent that they can be practicably applied to him, be subject to the same duties and obligations under this Act as apply to a licensee.
8. EXPLORATION FOR AND RECOVERY OF PETROLEUM.
(a) explores for petroleum otherwise than under and in accordance with a tenement or an instrument of consent issued under this Act; or
(b) carries on operations for the recovery of petroleum otherwise than under and in accordance with a tenement,
is guilty of an offence.
Penalty: A fine not exceeding K50,000.00.
Default penalty: A fine not exceeding K50,000.00.
PART II. – APPLICATION OF LAWS AND ADMINISTRATION.
9. LAWS OF PAPUA NEW GUINEA TO APPLY.
(2) The provisions referred to in Subsection (1) apply to and in relation to–
(a) all acts, omissions, matters, circumstances and things touching, concerning, arising out of, or connected with the exploration for petroleum of the sea, seabed or subsoil of the offshore area; and
(b) the exploitation of the natural resources, being petroleum, of the sea, seabed or subsoil of the offshore area.
(3) Without limiting the generality of Subsection (2), the provisions that apply in accordance with this section in the offshore area apply–
(a) to and in relation to–
(i) an act or omission that takes place in, on, above, below, or in the vicinity of the sea, seabed or subsoil of that area; and
(ii) a matter, circumstance, or thing that exists or arises with respect to or in connection with a vessel, aircraft, structure or installation or equipment or other property that is in that area for any reason touching, concerning, arising out of or connected with–
(A) the exploration for petroleum; or
(B) the exploitation of the natural resources, being petroleum,
of the sea, seabed or subsoil of that area; and
(b) to and in relation to a person who–
(i) is in that area; or
(ii) is in, on, above, below, or in the vicinity of a vessel, aircraft, structure or installation, or equipment or other property that is in that area,
for any reason of the kind referred to in Paragraph (a); and
(c) to and in relation to a person in respect of his carrying on any operation or doing any work in that area for any reason of the kind referred to in Paragraph (a).
(4) The regulations may provide that such of the provisions that apply in accordance with this section in the offshore area that are specified in the regulations do not apply, or apply with such modifications as are specified in the regulations.
(5) For the purposes of Subsection (4), “modifications” includes the omission or addition of a provision or the substitution of a provision for another provision.
10. JURISDICTION OF COURTS.
(2) Subject to this Act, the laws with respect to the arrest and custody of offenders or persons charged with offences, and the procedure for–
(a) their summary conviction; and
(b) their examination and committal for trial on indictment; and
(c) their trial and conviction on indictment; and
(d) the hearing and determination of appeals arising out of any such trial or conviction or out of any proceedings connected with it,
and for holding accused persons to bail apply, so far as they are applicable, to a person who is charged with an offence against any of the provisions applied by Section 9.
11. APPOINTMENT OF DIRECTOR.
12. DELEGATION.
13. PETROLEUM ADVISORY BOARD.
(2)[17] [18]Subject to Subsection (3), the Board shall consist of –
(a) the Director, who shall be the Chairman, or his delegate; and
(b) the Secretary of the Department responsible for national planning matters or his delegate appointment in writing and furnished to the Director; and
(c) the Secretary of the Department responsible for treasury matters or his delegate appointed in writing and furnished to the Director; and
(d) the Secretary of the Department responsible for provincial and Local government matters or his delegate appointed in writing and furnished to the Director; and
(e) the Director of Petroleum Division of the Department, who shall be the Deputy Chairman, or his delegate appointed in writing; and
(f) the Chief Inspector appointed pursuant to Section 151 or his delegate appointed in writing and furnished to the Director; and
(g) the Director of the Investment Promotion Authority or his delegate appointed in writing and furnished to the Director.
(3) If a member of the Board, other than the Chairman or Deputy Chairman is, for any reason, unable to perform his duties as a member, that member may, in writing, appoint a person to act as his substitute for the period of that member’s inability, and a person so appointed shall, while so appointed, be a member of the Board.
(3A)[19] [20]In the absence of the Chairman, the Deputy Chairman appointed pursuant to Section 12(2)(e) shall act as Chairman and exercise all powers and responsibilities of the Chairman.
(4)[21] [22]For the purposes of this section, a delegate appointed under this section shall be a senior officer at the Assistant Secretary level or above.
14. MEETINGS OF THE BOARD.
(2) At a meeting of the Board–
(a)[23] the Chairman or in his absence the Deputy Chairman, and three other persons specified in Section 13(2) are a quorum.
(b) all matters shall be decided by a majority of votes and the Chairman, or in his absence the Deputy Chairman, has a deliberative, and, in the event of an equality of votes, also a casting vote.
15. POWERS AND DUTIES OF BOARD.
(2) The Board shall inquire into and advise the Minister on any question or matter referred to it under Subsection (1) or as required by this Act.
(3) The referral of a question or matter under Subsection (1) shall be deemed to be a Commission issued under the Commissions of Inquiry Act 1951, and the provisions of that Act, including the provisions relating to penalties, apply to and in respect of an inquiry under this section as if the Minister were the Head of State, acting on advice, and the members of the Board were Commissioners within the meaning of that Act.
16. NO PERSONAL LIABILITY FOR BOARD, MINISTER OR DIRECTOR.
PART III. – PETROLEUM EXPLORATION AND DEVELOPMENT.
Division 1.
Preliminary.
17. GRATICULATION OF EARTH’S SURFACE AND CONSTITUTION OF BLOCKS.
(a) by the meridian of Greenwich and by meridians that are at a distance from that meridian of five minutes, or a multiple of five minutes, of longitude; and
(b) by the equator and by parallels of latitude that are at a distance from the equator of five minutes, or a multiple of five minutes, of latitude,
each of which is bounded–
(c) by portions of two of those meridians that are at a distance from each other of five minutes of longitude; and
(d) by portions of two of those parallels of latitude that are at a distance from each other of five minutes of latitude.
(2) Subject to Subsection (3), all or so much of a graticular section that is contained in the area of the country and the offshore area constitutes a block.
(3) Where the area in respect of which a tenement is in force includes one or more portions of a block constituted as provided by Subsection (1)–
(a) the area of that portion or those portions constitutes a block; and
(b) the area of the remaining portion or portions of the first-mentioned block (but not including any part of that area in respect of which a tenement is in force) constitutes a block.
(4) Where a tenement ceases to be in force in respect of an area referred to in Subsection (3)(a), the Minister may, by instrument determine that the area shall be amalgamated with another block or blocks, being a block or blocks–
(a) constituted as provided by this section; and
(b) forming part of the graticular section of which the area forms part; and
(c) that is or are either–
(i) a block or blocks in respect of which a tenement is in force; or
(ii) a block or blocks constituted under Subsection (3)(b).
(5) Where a determination is made under Subsection (4)–
(a) the area and blocks both the subject of the determination, cease to constitute separate blocks and their areas together constitute a single block; and
(b) in respect of the area and a block in respect of which there is a tenement in force–the block constituted by the determination is a block for the remainder of the term of that tenement.
(6) In this Act–
(a) a reference to a block that is constituted by a graticular section includes a reference to a block that is constituted by the area of a part of a graticular section; and
(b) a reference to a graticular section that constitutes a block includes a reference to a graticular section part only of which constitutes a block.
18. PROSPECTING LICENCES UNDER TORRES STRAIT TREATY.
(2) In Divisions 3, 10, 13 and 14 “licence” and “tenement” shall, where applicable, include a licence granted under this section.
(3) In this section “the Treaty” means the Treaty between the Independent State of Papua New Guinea and Australia concerning Sovereignty and Maritime Boundaries in the area between the two countries, including the area known as Torres Strait and related matters signed at Sydney 18 December 1978.
(4) Where, under Article 5 of the Treaty, a person entitled to apply for a petroleum prospecting licence, so applies, the Minister shall grant to him a petroleum prospecting licence.
(5) A licence granted under Subsection (4) shall be granted on terms that are not less favourable than a tenement granted under Division 2.
19. ISSUE OF LICENCES.
(a) comprised in a tenement; or
(b) reserved by declaration under Section 20.
(2) A licence may be held by–
(a) a natural person; or
(b) a body corporate that is incorporated in Papua New Guinea or registered as an overseas company under the Companies Act 1997; or
(c) an unincorporated combination of–
(i) natural persons; or
(ii) corporations to which Paragraph (b) applies; or
(iii) a natural person or natural persons and a corporation or corporations to which Paragraph (b) applies.
(3) A notification of the issue of a licence shall be published in the National Gazette.
20. RESERVATION OF BLOCKS.
(2) While a declaration under Subsection (1) remains in force in respect of a block or blocks, a tenement shall not be granted in respect of that block or those blocks.
Division 2.
Petroleum Prospecting Licences.
21. APPLICATIONS FOR PETROLEUM PROSPECTING LICENCE.
(2) The Minister may, by notice in the National Gazette–
(a) invite applications for the grant of a petroleum prospecting licence in respect of the block or blocks specified in the notice; and
(b) specify the period during which an application may be made.
22. FORM OF APPLICATION FOR PETROLEUM PROSPECTING LICENCE.
(a) shall be in an approved form; and
(b) shall be made in an approved manner; and
(c) subject to Subsection (2)–shall be in respect of not more than 60 blocks; and
(d) shall be accompanied by particulars of–
(i) the detailed proposals of the applicant for work and expenditure in respect of the block or blocks specified in the application during the first two years of the term of the licence and an outline of proposals for work and expenditure during the remaining four years of the licence; and
(ii) the technical qualifications of the applicant and of his employees; and
(iii) the technical advice available to the applicant; and
(iv) the financial resources available to the applicant; and
(e) may set out any other matters that the applicant wishes the Minister to consider; and
(f) shall be accompanied by the fee prescribed by Section 157.
(2) The Minister may consider an application in respect of more than 60 but not more than 200 blocks where he is satisfied that special circumstances exist for his doing so.
(3) The blocks specified in the application referred to in Subsections (1) and (2) shall be constituted by graticular sections that–
(a) form a single area; and
(b) are such that each graticular section in that area has a side in common with at least one other graticular section in that area.
(4) The Director may, at any time, by instrument served on the applicant, require him to furnish, within the time specified in the instrument, such further written information in connection with his application as the Director considers necessary.
(5) Where an application is received under, or as a result of an invitation under, Section 21–
(a) notice of the application shall be published by the Director in the National Gazette; and
(b) any person who claims to be affected by the application may file notice of his objection to that application with the Director within one month after the date of publication of the notice of application and all objections shall be considered by the Board before the Board reports on the application.
(6) As soon as practicable after the granting of a licence in respect of any block or blocks specified in an application made under, or as a result of an invitation under, Section 21, the Minister shall cause to be published in the National Gazette, particulars of any licence so granted.
23. GRANT OR REFUSAL OF PETROLEUM PROSPECTING LICENCE.
(a) by instrument served on the applicant, inform the applicant–
(i) that he is prepared to grant to the applicant a petroleum prospecting licence in respect of any or all of the blocks specified in the instrument, being blocks to which the application relates; and
(ii) that the applicant will be required to lodge a security for compliance with the conditions to which the licence, if granted, will be subject, and with the provisions of this Act, and to pay the first annual fee; or
(b) refuse to grant a licence to the applicant.
(2) An instrument under Subsection (1)(a) shall contain–
(a) the conditions subject to which the licence is to be granted; and
(b) a statement to the effect that the application will lapse if the applicant does not make a request under Subsection (3) in respect of the grant of the licence and lodge with the Director the security specified in the instrument and the first annual fee.
(3) An applicant who has been served with an instrument under Subsection (1) may, within a period of one month after the date of service of the instrument on him, or within such further period, not exceeding three months, as the Minister may allow–
(a) by instrument served on the Minister request the Minister to grant him the licence; and
(b) lodge with the Director the security referred to in Subsection (1)(a) and the first annual fee referred to in that subsection.
(4) Where an applicant has complied with the requirements of Subsection (3), the Minister shall grant to him a petroleum prospecting licence in respect of the block or blocks specified in the instrument, subject to the conditions specified in the instrument or such other conditions as are agreed on by the Minister and the applicant, but in any other case the application lapses.
24. VARIATION OF PETROLEUM PROSPECTING LICENCE.
(2) An application under Subsection (1) shall–
(a) specify the reasons for proposed variation; and
(b) be made in an approved form and contain the information specified in Section 22.
(3) The Director may require the applicant to furnish such further information in connection with his application as the Director considers necessary.
(4) Following receipt of an application under Subsection (1) the Minister may, after considering a report of the Board and any matters submitted to him under this section–
(a) amend the terms of the petroleum prospecting licence to provide as stipulated in the application or as otherwise agreed with the petroleum prospecting licensee; or
(b) refuse the application, in which case the existing petroleum prospecting licence shall remain in full force and effect.
25. RIGHTS CONFERRED BY PETROLEUM PROSPECTING LICENCE.
26. TERM OF PETROLEUM PROSPECTING LICENCE.
(a) for a period of six years commencing on the day the licence takes effect; and
(b) where the licence is extended under Section 29–for a further period of five years; and
(c) where the licence is extended under Section 30–for the further period specified by the Minister on the grant of the extension.
27. APPLICATION FOR EXTENSION OF PETROLEUM PROSPECTING LICENCE.
(2) An application under this section may be made once only in respect of any petroleum prospecting licence.
(3) An application under this section–
(a) shall be in an approved form; and
(b) shall be made in an approved manner; and
(c) shall be made not less than three months before the day on which the licence is due to expire; and
(d) shall be accompanied by particulars of–
(i) the work carried out in, and the amounts expended in respect of, the licence area during the term of the licence up to and including the date of the application; and
(ii) the proposals of the applicant for work and expenditure in respect of the blocks specified in the application; and
(e) may set out any other matters that the applicant requires the Minister to consider; and
(f) shall be accompanied by the fee prescribed by Section 157.
(4) The Minister may, after considering a report from the Board, accept an application for the extension of a petroleum prospecting licence less than three months before, but not in any case after, the date of expiry of the licence.
28. APPLICATION FOR EXTENSION TO BE IN RESPECT OF REDUCED AREA.
(a) the number of blocks (if any) the subject of the petroleum prospecting licence that, at the date of expiration of the petroleum prospecting licence, were a location not subject to a petroleum retention licence or an application for a petroleum retention licence; and
(b) the number of blocks (if any) the subject of the petroleum prospecting licence that, at the date of expiration of the petroleum prospecting licence, are contained within a petroleum retention licence or the subject of an application for a petroleum retention licence; and
(c) half the number of blocks in respect of which the petroleum prospecting licence was issued.
(2) The blocks specified in an application for the extension of a petroleum prospecting licence shall be blocks that relate to graticular sections that–
(a) constitute a single area or not more than three discrete areas; and
(b) are such that each graticular section in each area has a side in common with at least one other graticular section in that area.
29. GRANT OR REFUSAL OF EXTENSION OF PETROLEUM PROSPECTING LICENCE.
(a) shall, if the licensee has complied with the conditions to which the licence is subject and the provisions of this Act; or
(b) may, if the licensee has not complied with the conditions to which the licence is subject or the provisions of this Act and the Minister after considering a report from the Board is satisfied that although the licensee has not so complied, special circumstances exist that justify the granting of the extension of the licence,
inform the licensee, by instrument served on the licensee–
(c) that he is prepared to grant to the licensee the extension of the licence; and
(d) that the licensee will be required to lodge a security, or extend a security already lodged, for compliance with–
(i) the conditions to which the licence, if the extension is granted, will from time to time be subject; and
(ii) with the provisions of this Act; and
(e) of the amount of the next annual fee.
(2) If the licensee has not complied with the conditions to which the licence is subject or with the provisions of this Act, and if the Minister is not satisfied that special circumstances exist that justify the granting of the extension of the licence, the Minister shall, subject to Subsection (3), by instrument served on the licensee, refuse to grant the extension of the licence.
(3) The Minister shall not refuse to grant the extension of a petroleum prospecting licence under this section unless–
(a) he has, by instrument served on the licensee, given not less than one month’s notice of his intention to refuse to grant the extension of the licence; and
(b) he has caused a copy of the instrument to be served on such other persons (if any) as he thinks fit; and
(c) he has, in the instrument–
(i) given particulars of the reasons for the intention; and
(ii) specified a date on or before which written submissions may be served on the Minister in connection with the proposed refusal; and
(d) after–
(i) taking into account any matters submitted to him under Paragraph (c)(ii) on or before the specified date; and
(ii) considering a report from the Board on those matters,
he is not satisfied that special conditions exist that justify the granting of the extension of the licence.
(4) An instrument under Subsection (1) shall–
(a) specify the conditions to which the licence, on the grant of the extension, is to be subject; and
(b) contain a statement to the effect that the application will lapse if the applicant does not–
(i) make a request under Subsection (5) in respect of the grant of the extension of the licence; and
(ii) lodge with the Director the security specified in the instrument and the annual fee.
(5) A licensee who has been served with an instrument under Subsection (1) may, within a period of one month after the date of service of the instrument on him–
(a) by instrument served on the Minister request the Minister to grant to him the extension of the licence; and
(b) lodge with the Director the security specified in the instrument and pay the annual fee.
(6) Where a licensee who has been served with an instrument under Subsection (1) has, within the period specified in Subsection (5)–
(a) made a request under Subsection (5); and
(b) lodged with the Director the security specified in the instrument referred to in Subsection (1) and paid the next annual fee,
the Minister shall grant to the licensee the extension of the licence.
(7) Where a licensee who has been served with an instrument under Subsection (1) has not, within the period specified in Subsection (5)–
(a) made a request under Subsection (5); or
(b) lodged with the Director the security specified in the instrument and paid the annual fee,
the application lapses at the end of that period.
(8) Where–
(a) an application for the extension of a licence has been made; and
(b) the licence expires–
(i) before the Minister grants, or refuses to grant, the extension of the licence; or
(ii) before the application lapses under Subsection (7),
the licence shall be deemed to continue in force until the Minister grants or refuses to grant the extension of the licence, or the application lapses under Subsection (7), whichever first occurs.
(9) As soon as practicable after the grant or refusal of an extension of a licence under this section, the Minister shall cause to be published in the National Gazette particulars of any extension so granted or, in the case of a refusal, a statement to that effect.
(10) Where a petroleum prospecting licence is not extended on an application under this section, 90% of the fee referred to in Section 27(3)(f) shall be refunded to the applicant.
30. EXTENSION OF PETROLEUM PROSPECTING LICENCE IN RESPECT OF LOCATION.
(a) petroleum is discovered in a petroleum prospecting licence area within the period of two years before the date of expiration of a petroleum prospecting licence that has been extended under Section 29; and
(b) the Minister has made a declaration of a location under Section 34, or the licensee has nominated a block or blocks under that section for the purpose of a declaration of a location,
the Minister may grant a further extension of the licence in respect of the block or blocks to which Paragraph (b) applies.
(2) A further extension granted under Subsection (1)–
(a) shall be for a period not exceeding three years; and
(b) shall be subject to any conditions that the Minister, after considering a report of the Board, thinks fit and specifies in the licence.
(3) Where, before the expiration of a petroleum prospecting licence that includes blocks that constitute a location, the licensee–
(a) makes written application to the Minister for an extension or a further extension of the licence in respect of some or all of those blocks; and
(b) satisfies the Minister that–
(iii) the blocks contain all or part of a petroleum pool or are otherwise properly included in a location; and
(iv) the construction, establishment and operation of facilities for the recovery of petroleum is not economically feasible,
the Minister may grant an extension or a further extension of the petroleum prospecting licence in respect of those blocks.
(4) An extension under Subsection (3) shall be for a period not exceeding one year.
31. CONDITIONS OF GRANT OF PETROLEUM PROSPECTING LICENCE.
(2) In addition to conditions included in a petroleum prospecting licence under Subsection (1) or on an extension of that licence under Section 29, the licence is subject to the conditions–
(a) that acceptable proposals for work and expenditure in the third, fourth, fifth, and sixth years, if applicable, of the licence or that extension shall be submitted to the Minister for approval not later than two months before the expiration of the second and fourth years of the licence or that extension, as the case requires; and
(b) that in, or in relation to, the licence area, the licensee will, during the first two years of the licence, carry out the work and expend the amounts specified in the licence conditions for those years; and
(c) that at the end of the period of six months after the date of grant of the licence and at the end of every subsequent period of six months of the term of the licence, the licensee shall forward to the Director, in duplicate, a report showing the nature and results of prospecting operations conducted during the immediately preceding period of six months, with a plan of the area prospected, showing all available information together with a programme of his operations for the next succeeding six months; and
(d) that, at the end of the period of six months after the date of grant, and at the end of every subsequent period of six months, the licensee shall forward to the Director a statement, in duplicate, showing the amounts expended in relation to the licence during the immediately preceding period of six months; and
(e) that the licensee will provide to the Director reports on the activities of the licensee in respect of the licence containing such information and at such frequency as are specified in and will otherwise comply with any direction given under Section 148; and
(f) that the licensee will carry out social mapping and landowner identification studies in accordance with Section 47; and
(g) that, in addition to complying with Paragraph (f), at the end of each year of the licence, the licensee shall present to the Director a report on prospecting operations in the previous year and proposed operations for the following year.
(3) The conditions to which a licence or an extension of that licence under Section 29 is subject, including the conditions specified in Subsection (2), may be varied in the third, fourth, fifth and sixth years, if applicable, insofar as they relate to the work programme and in accordance with proposals submitted under Subsection (2)(a).
Division 3.
Discovery of Petroleum in Licence Area.
32. DISCOVERY OF PETROLEUM TO BE NOTIFIED.
(a) shall immediately inform the Director of the discovery; and
(b) shall, within a period of three days after the date of the discovery, furnish to the Minister written particulars of the discovery.
(2) Where petroleum is discovered in a licence area, the Director may, from time to time, by instrument served on the tenement holder, direct the tenement holder to furnish to him, within the period specified in the instrument, written particulars of–
(a) the chemical composition and physical properties of the petroleum; and
(b) the nature of the subsoil in which the petroleum occurs; and
(c) any other matters relating to the discovery that are specified by the Director in the instrument.
(3) A person to whom a direction is given under Subsection (2) who fails or refuses to comply with the direction is guilty of an offence.
Penalty: A fine not exceeding K5,000.00.
33. DIRECTIONS BY MINISTER ON DISCOVERY OF PETROLEUM.
(a) the chemical composition and physical properties of the petroleum; and
(b) the quantity of petroleum in the petroleum pool to which the discovery relates, or if part only of that petroleum pool is within the licence area, in the part of the petroleum pool that is within the licence area.
(2) A person to whom a direction is given under Subsection (1) who fails or refuses to comply with the direction is guilty of an offence.
Penalty: A fine not exceeding K5,000.00.
34. DECLARATION OF LOCATION.
(2) Where petroleum has been discovered in a block within a tenement (not being a block that is or is included in a location) the Minister–
(a) shall, on receipt of a request from the licensee; and
(b) may in any case,
declare by notice in the National Gazette–
(c) in a case referred to in Paragraph (a)–the discovery block and not more than eight adjoining blocks within the licence area that are nominated by the licensee; or
(d) in any other case–the discovery block and such adjoining blocks as the Minister thinks proper,
to be a location for the purposes of this Act.
(3) At the request of the tenement holder or of his own volition the Minister may, by notice in the National Gazette–
(a) include in a location additional adjoining blocks; or
(b) revoke the declaration of a location in respect of one or more blocks,
but a location may not at any time include more than nine blocks.
(4) For the purposes of this section, a block adjoins a discovery block, if the graticular section that constitutes or includes the first-mentioned block has a side in common with, or touches–
(a) the discovery block; or
(b) any block that has a side in common with, or touches, the discovery block.
35. INVESTIGATION, ETC., OF LOCATION.
(2) The investigations and studies referred to in Subsection (1) may include–
(a) technical and economic feasibility studies relating to the recovery and transport of petroleum from the location and processing of the petroleum; and
(b) studies of proposed sites for facilities that would be required by the industry referred to in Subsection (1); and
(c) studies of port or berthing facilities, and roads, pipelines or other transportation facilities; and
(d) investigations into–
(i) suitable water facilities and reticulation systems for industrial and town purposes; and
(ii) the location and design of a suitable airstrip and associated landing and terminal facilities, if required; and
(iii) the generation and transmission of electricity as required; and
(e) investigations into the development, if required, of a suitable town for the industry referred to in Subsection (1), including the design of housing facilities and associated civic, cultural and social facilities; and
(f) investigations of any other works, services or facilities that may be required by that industry in relation to the location; and
(g) studies of future labour requirements for that industry; and
(h) physical impact studies into the possible effects of that industry on the environment.
(3) The tenement holder shall furnish to the Minister, within the period specified in the notice under Subsection (1), such reports, analyses and data resulting from the investigations and studies carried out under this section as the Minister, by written notice served on the tenement holder, may require.
36. REVOCATION OF DECLARATION OF LOCATION.
(a) a period of two years following the declaration of the location under Section 34(2); or
(b) any further period that the Minister allows under Section 53(1),
apply–
(c) in the case of a location declared in a petroleum prospecting licence, for a petroleum retention licence or petroleum development licence in respect of the blocks included in the location; or
(d) in the case of a location declared in a petroleum retention licence, for a petroleum development licence in respect of the blocks included in the location or a variation of the petroleum retention licence to cover the specific petroleum pool in respect of which the location was declared; or
(e) in the case of a location declared in a petroleum development licence, for a variation of the petroleum development licence to provide for the development of the specific petroleum pool in respect of which the location was declared,
the Minister shall, by notice in the National Gazette, revoke the declaration of the location.
(2) Where all applications made under Section 53(1) for a petroleum development licence or Section 37(1) for a petroleum retention licence in respect of a block that is included in a location have lapsed, the petroleum prospecting licence or petroleum retention licence, as the case may be, is revoked in respect of that block.
(3) Where a petroleum prospecting licence is revoked in respect of a block under Subsection (2), the Minister shall, by notice in the National Gazette, revoke the declaration of the location so far as it includes that block.
Division 4.
Petroleum Retention Licences.
37. APPLICATION FOR PETROLEUM RETENTION LICENCE.
(2) A licensee may, during the term of a petroleum prospecting licence, make application to the Director for a petroleum retention licence in respect of any block or blocks within the licence area–
(a) that he satisfies the Minister contains or contain a gas field or part of a gas field, or, for the better administration of petroleum activities, should be included in a petroleum retention licence; and
(b) that do not at the time of making the application constitute a location.
(3) A person who is not the holder of a tenement in respect of a block or blocks may make application to the Director for a petroleum retention licence in respect of that block or those blocks where–
(a) he satisfies the Minister that such block or blocks contains or contain a gas field or part of a gas field; and
(b) that block is not a block or those blocks are not blocks in respect of which a tenement is in force at the time of the application.
38. FORM OF APPLICATION FOR PETROLEUM RETENTION LICENCE.
(a) shall be in an approved form; and
(b) shall be made in an approved manner; and
(c) shall be accompanied by particulars of–
(i) the proposals of the applicant for work and expenditure in respect of the area comprised in the block or blocks specified in the application; and
(ii) the commercial viability of the recovery of petroleum from the area comprised in the block or blocks specified in the application at the time of the application, and of the possible future commercial viability of the recovery of petroleum from that area; and
(d) may set out any other matters that the applicant wishes the Minister to consider; and
(e) shall be accompanied by the fee prescribed by Section 157.
(2) The Director may, by instrument served on the applicant, require him to furnish, within a period specified in the instrument–
(a) such further written information in connection with his application as the Director specifies in the instrument; and
(b) such proposals, in addition to or by way of alteration to any proposals that have already been furnished under Subsection (1) as the Director specifies in the instrument, including proposals relating to any of the matters referred to in Section 35(2).
39. NOTIFICATION OF GRANT OF PETROLEUM RETENTION LICENCE.
(a) under Section 37(1) or (2); and
(b) the applicant has furnished proposals and any further information required by the Director under Section 38; and
(c) the Minister, after considering a report from the Board, is satisfied as to the matters set out in Section 37(1) or (2) and with the proposals and other information provided under Section 38 and that recovery of petroleum from the area comprised in the blocks specified in the application–
(i) is not at the time of application commercially viable; and
(ii) could become commercially viable within the period of time ending at the expiration of a petroleum retention licence if extended for the maximum permitted period,
the Minister shall, by instrument served on the applicant, inform the applicant–
(d) that–
(i) he is prepared to approve the proposals wholly or in part, and to grant to the applicant, on the basis of the approved proposals, a petroleum retention licence in respect of the blocks specified in the application; and
(ii)[24] the applicant will be required to lodge a security for compliance with the conditions to which the licence, if granted, will be subject, and with the provisions of this Act, and to pay the first annual fee; or
(e) that he will defer consideration of a decision on the licence application until the applicant furnishes such proposals, in addition to or by way of alteration to the proposals furnished under Section 38 as the Minister specifies in the instrument, including proposals relating to any of the matters referred to in Section 35(2); or
(e) that he is prepared to approve the proposals and to grant to the applicant a petroleum retention licence in respect of the blocks specified in the application, subject to the applicant–
(i) making such alterations to the proposals; or
(ii) complying with such conditions in relation to the proposals,
as the Minister thinks reasonable.
(2) Where an application is made under Section 37(3), the Minister may–
(a) refuse to grant the application and advise the applicant accordingly; or
(b) treat the application as an application made under Section 37(1) or (2).
(3) Where, under Subsection (2), the Minister elects to treat an application as an application made under Section 37(1) or (2), that application shall, for the purposes of this section and Section 40, be deemed to be an application so made.
(4) In the case of an instrument to which Subsection (1)(f) applies, the Minister shall give to the applicant details of his reasons for requiring the alterations or imposing the conditions referred to in the instrument.
(5) An instrument under Subsection (1)(d), (e) or (f) shall contain a statement to the effect that the application will lapse if–
(a) the applicant does not furnish any further proposals that the Minister requires within such period as the Minister specifies in the instrument, being a period of not less than two months nor more than one year; or
(b) the applicant does not make a request under Section 40(1) in respect of the grant of the licence; or
(c)[25] the applicant does not lodge with the Director the security referred to in Subsection (1)(d)(ii), and does not pay the first annual fee referred to in that Subsection.
(6) In determining whether recovery of petroleum is commercially viable for the purposes of Subsection (1)(c) and Section 45(1)(b), the Minister shall invite and consider submissions from the applicant and shall take into account all relevant matters including technical assessment of the petroleum situated within the blocks constituting the area at the time and the estimated development costs and likelihood that a development would earn a reasonable rate consistent with international petroleum industry anticipated returns on gas projects.
40. GRANT OR REFUSAL OF PETROLEUM RETENTION LICENCE.
(a) the period of three months after the date of service of the instrument on him or such further period, not exceeding three months, as the Minister allows; or
(b) the period specified by the Minister under Section 39(5)(a),
whichever is the later,
(c) by instrument served on the Minister–
(i) request the Minister to grant to him the licence to which the first-mentioned instrument relates; or
(ii) furnish the Minister with any further particulars required under Section 39(1)(e); and
(iii) pay the first annual fee to the Director.
(d)[26] lodged with the Director the security and the first annual fee referred to in Section 39(1)(d)(ii).
(2) Where–
(a) an applicant has, within the period specified in Subsection (1)–
(i) made a request under Subsection (1)(c); and
(ii)[27] lodge with the Director the security and the first annual fee referred to in Section 39(1)(d)(ii); and
(iii) furnished the Minister with any further proposals required under Section 39(1)(e); and
(b) the Minister is satisfied that the applicant’s proposals and further proposals adequately provide for such market and technical studies as may reasonably be expected to provide sufficient information to enable the gas field to be brought to timely economic development,
the Minister shall approve the proposals and grant to the applicant a petroleum retention licence in respect of the blocks referred to in Section 39(1)(c), but in any other case the Minister may, by instrument, refuse to grant the licence.
(3) The Minister shall not refuse under Subsection (2) to grant the licence unless–
(a) he has, by the instrument referred to in Subsection (2) served on the applicant, given not less than one month’s notice of his intention to do so; and
(b) he has, in that instrument–
(i) given the reasons for his intention; and
(ii) specified a date on or before which the applicant may, by instrument served on the Minister, submit any matter that the applicant requires the Minister to consider including new proposals generally or in respect of some particular matter; and
(c) he has given to the applicant, and to any persons whom the applicant thinks fit to consult, a full opportunity to consult with the Minister concerning the Minister’s intention to refuse the licence; and
(d) he has taken into account, after considering a report from the Board, any matters raised in the course of such consultations by the applicant or by any other person referred to in Paragraph (c).
(4) Where the holder of a petroleum prospecting licence applies for a petroleum retention licence in respect of all or part of the area of that petroleum prospecting licence, then notwithstanding the provisions of Division 2 as to expiry of the petroleum prospecting licence that petroleum prospecting licence shall not expire in respect of the area for which a petroleum retention licence is sought until the Minister has granted or refused to grant, as the case may be, a petroleum retention licence under Subsection (2).
(5) Where the holder of a petroleum prospecting licence applies for a petroleum retention licence in respect of all or part of the area of that petroleum prospecting licence and the Minister refuses to grant a petroleum retention licence on the ground that he is not satisfied as to the matter referred to in Section 39(1)(c)(i), then notwithstanding the provisions of Division 2 as to expiry of the petroleum prospecting licence that petroleum prospecting licence shall not expire in respect of the area for which a petroleum retention licence was sought until one year after the date of the instrument referred to in Subsection (2).
41. VARIATION OF PETROLEUM RETENTION LICENCE.
(a) having a side or sides in common, or touching, a block the subject of the petroleum retention licence; and
(b) not being the subject of a tenement held by a person other than the applicant or the subject of a petroleum development licence held by the applicant.
(2) Where an application is made under Subsection (1), the Minister may, by instrument served on the licensee, vary the petroleum retention licence to include in the licence area the block or blocks to which the application relates.
(3) From and including the day on which a variation of a licence under this section takes effect–
(a) the blocks included in the licence area by reason of the variation are, subject to this Act, for the remainder of the term of the licence, blocks in respect of which the petroleum retention licence is in force; and
(b) any petroleum prospecting licence that is in force in respect of the blocks so included is revoked in respect of those blocks.
(4) The holder of a petroleum retention licence may, at any time, make an application to the Minister for any other variation of the petroleum retention licence.
(5) An application under Subsection (4) shall–
(a) specify the reasons for proposed variation; and
(b) be made in an approved form and contain the information specified in Section 38.
(6) The Director may require the applicant to furnish such further information in connection with his application as the Director considers necessary.
(7) Following receipt of an application under Subsection (4) the Minister may, after considering a report of the Board and any matters submitted to him under this section–
(a) amend the terms of the petroleum retention licence to provide as stipulated in the application or as otherwise agreed with the petroleum retention licensee; or
(b) refuse the application, in which case the existing petroleum retention licence shall remain in full force and effect.
42. RIGHTS CONFERRED BY PETROLEUM RETENTION LICENCE.
(a) to explore for petroleum in the petroleum retention licence area; and
(b) to carry on field studies to obtain information to ensure timely economic development of the gas field in the petroleum retention licence area; and
(c)[28] to carry on such operations and execute such works in the petroleum retention licence area as are necessary for or in connection with the purposes specified in Paragraphs (a) and (b), including the construction and operation of water lines; and.
(d)[29] if authorized by the Director, to complete wells, carry out drill stem tests or extended production tests for appraisal of a petroleum pool (including the construction and the operation of pipes and facilities to gather and transport petroleum to a point of testing or treatment or disposal), and to recover ans sell or otherwise dispose of all petroleum do produced.
43. TERM OF PETROLEUM RETENTION LICENCE.
(a) for a period of five years commencing on the day on which the licence takes effect; and
(b) where the licence is extended under Section 45–for a further period of five years at each extension.
44. APPLICATION FOR EXTENSION OF PETROLEUM RETENTION LICENCE.
(2) An application under this section may be made twice only in respect of a licence.
(3) An application for an extension of a petroleum retention licence–
(a) shall be in an approved form; and
(b) subject to Subsection (4), shall be made in an approved manner not later than six months before the day on which the licence is due to expire; and
(c) shall be accompanied by particulars of–
(i) the blocks in respect of which the extension is sought; and
(ii) the work carried out and the amounts expended in respect of the licence area up to and including a date not earlier than one month immediately preceding the date of application; and
(iii) the proposals of the licensee for work and expenditure in respect of the area; and
(d) shall be accompanied by the applicant’s submissions in respect of the matters set out in Paragraphs 45(1)(a), (b) and (c); and
(e) shall be accompanied by the fee prescribed by Section 157.
(4) The Minister may, after considering a report from the Board, accept an application for the extension of a petroleum retention licence later than six months before the licence is due to expire, but in any case not after the licence has expired.
45. GRANT OR REFUSAL OF EXTENSION OF PETROLEUM RETENTION LICENCE.
(a) that–
(i) the blocks in respect of which the extension is sought contain a gas field or part thereof; or
(ii) it is appropriate for the proper administration of petroleum activities that the blocks in respect of which the extension is sought are included in the licence; and
(b) that the recovery of petroleum from the area comprised in the blocks specified in the application–
(i) is not at the time of application commercially viable; and
(ii) could become commercially viable within the period of time ending at the expiration of the petroleum retention licence if extended for the maximum permitted time; and
(c) that the applicant’s proposals provide adequately for such market and technical studies and other work as may reasonably be expected to provide sufficient information to enable the gas field to be brought to timely economic development,
inform the licensee, by instrument served on the licensee, that he is prepared to grant to the licensee the extension of the licence.
(2) Where a petroleum retention licensee who has not complied with the conditions specified in the licence or with the provisions of this Act, makes an application under Section 44 for the extension of the licence, the Minister may, if, after considering a report from the Board, he is satisfied as to the matters set out in Subsection (1) and further satisfied that, although the licensee has not so complied, special circumstances exists that justify the granting of the extension of the licence, inform the licensee, by instrument served on the licensee, that he is prepared to grant to him an extension of the licence.
(3) Where a petroleum retention licensee has not complied with the conditions specified in the licence or with the provisions of this Act, and the Minister is not satisfied that special circumstances exist that justify the granting of the extension of the licence, the Minister shall, subject to Subsection (5), by instrument served on the licensee, refuse to grant the extension of the licence.
(4) Where the Minister is not satisfied as to the matters set out in Subsection (1), the Minister shall, subject to Subsection (5), by instrument served on the licensee, refuse to grant the extension of the licence.
(5) The Minister shall not refuse to grant the extension of a petroleum retention licence unless–
(a) he has, by instrument served on the licensee, given not less than one month’s notice of his intention to refuse to grant the extension of the licence; and
(b) he has served a copy of the instrument on such other persons (if any) as he thinks fit; and
(c) he has, in the instrument–
(i) given the reasons for his intention to refuse; and
(ii) specified a date on or before which the licensee or a person on whom a copy of the instrument is served may, by instrument served on the Minister, submit any matters that he requires the Minister to consider; and
(d) he has taken into account, after considering a report from the Board, any matters so submitted to him, on or before the specified date, by the licensee or a person on whom a copy of the instrument has been served.
(6) An instrument under Subsection (1) or (2) shall contain–
(a) a summary of the conditions to which the grant of the extension is to be subject; and
(b) a statement to the effect that the application will lapse if the licensee–
(i) does not make a request under Subsection (7); or
(ii) does not pay the annual fee.
(7) A licensee who has been served with an instrument under Subsection (1) or (2) may, within a period of one month after the date of service of the instrument on him–
(a) by instrument served on the Minister, request the Minister to grant to him the extension of the licence; and
(b) pay the next annual fee.
(8) Where a licensee who has been served with an instrument under Subsection (1) or (2) has, within the period specified in Subsection (7)–
(a) made a request under Subsection (7); and
(b) paid the next annual fee,
the Minister shall approve the proposals and grant to the licensee the extension of the licence.
(9) Where a licensee who has been served with an instrument under Subsection (1) or (2) has not, within the period specified in Subsection (7)–
(a) made a request under Subsection (7); or
(b) paid the next annual fee,
the application lapses at the end of that period.
(10) Subject to Subsection (11), where–
(a) an application for the extension of a licence is made under Section 44; and
(b) the licence expires–
(i) before the Minister grants, or refuses to grant, the extension of the licence; or
(ii) before the application lapses under Subsection (9),
the licence shall be deemed to continue in force in all respects–
(c) until the Minister refuses to grant the extension of the licence; or
(d) until the application lapses under Subsection (9),
whichever first occurs.
(11) Where the Minister refuses to grant an extension under this section on the ground that he is not satisfied as to the matter referred to in Subsection (1)(b)(i), then notwithstanding the provisions of this Division as to expiry of the petroleum retention licence that petroleum retention licence shall not expire until one year after the date of service of the instrument referred to in Subsection (4).
46. CONDITIONS OF PETROLEUM RETENTION LICENCE.
(a) is subject to conditions that–
(i) the licensee will carry out the proposals approved under Section 40(2) or 45(8); and
(ii) the licensee will provide to the Director reports on the activities of the licensee in respect of the licence containing such information and at such frequency as are specified in and will otherwise comply with any direction given under Section 148; and
(iii) the licensee will carry out social mapping and landowner identification studies in accordance with Section 47; and
(b) may be made subject to such other conditions not inconsistent with this Act–
(i) as the Minister thinks proper and as are specified in the licence or extension of the licence; or
(ii) in respect of any matter or matters arising out of the applicant’s proposals referred to in Section 38(1)(c) that are not administered under this Act, as the Minister, after consultation with the Minister responsible for administering that matter or those matters, thinks proper and specifies in the licence or extension of the licence; and
(c) may require the licensee to enter into a gas agreement.
Division 5.
Social Mapping and Landowner Identification Studies.
47. SOCIAL MAPPING AND LANDOWNER IDENTIFICATION STUDIES.
(2) It shall be a condition of every petroleum retention licence that the licensee undertake social mapping studies and landowner identification studies in accordance with this section, to the extent that such studies have not been undertaken pursuant to a petroleum prospecting licence out of which the petroleum retention licence was granted.
(3) It shall be a condition of every petroleum development licence that the licensee undertake social mapping studies and landowner identification studies in accordance with this section, to the extent that such studies have not been undertaken pursuant to a petroleum prospecting licence or petroleum retention licence out of which the petroleum development licence was granted.
(4)[30] [31]Prior to first entry on to the licence area for the purposes of exploration pursuant to a petroleum prospecting licence or a petroleum retention licence, the licensee shall undertake–
(a) a preliminary social mapping study; and
(b) a preliminary landowner identification study,
of the customary land owners comprised in the licence area, with particular reference to that part of the licence area where the licensee’s exploration activities are to be concentrated.
(5)[32] [33]If a licensee or a person makes an application for a petroleum development licence under Section 53, the licensee shall submit with that application a full-scale social mapping study and landowner identification study of customary land owners in –
(a) the licence area of that petroleum development licence; and
(b) other licence areas, including pipeline areas, which pertain to that petroleum development licence; and
(c) the land within five kilometres of any facility which would be a dedicated project facility (other than a facility which would be situated on such a petroleum development licence) of the petroleum project; and
(d) other areas which would be affected by the petroleum project if developed.
(5A)[34] [35]If a licensee makes an application for a variation of the licence under Section 85(1), to include an additional block or blocks in a petroleum development licence, the licensee shall submit with that application a full-scale social mapping study and landowner identification study os customary land owners in –
(a) the additional block or blocks that will form part of that petroleum development licence; and
(b) other licence areas, including pipeline easements, which are associated with the petroleum development licence upon variation of such licence; and
(c) the land within five kilometres of any facility which would be a dedicated project facility (other than a facility which would be situated on such a petroleum development licence) of the petroleum project; and
(d) other areas which would be affected by the development of the additional block or blocks.
(6) The Minister may by regulation prescribe the scope and method of a social mapping study or landowner identification study conducted in accordance with this section, and requirements as to reports of such studies.
(7) Copies of any social mapping or landowner identification studies undertaken in accordance with this section (excluding any information which is confidential to the licensee or to the local groups of landowners) shall be provided to the Director.
Division 6.
Project Consultation.
48. DEVELOPMENT FORUM.
(a) the applicant or intending applicant for the licence or licences; and
(b) the project area landowners determined under Section 169(2) or their duly appointed or elected respresentatives; and
(c) the Local-level Government or Governments who would be affected Local-level Governments of the project if the application is granted; and
(d) the Provincial Government or Governments who would be affected Provincial Governments of the project if the application is granted; and
(e) the State.
(2) If subsequent to the first grant of a licence or licences in respect of a petroleum project there is an application for a further licence or licences or the variation under Section 58(1) of a petroleum development licence in respect of that petroleum project, the Minister shall convene a further development forum in respect of that petroleum project to which are invited persons who, as a result of social mapping and landowner identification studies, in the view of the Minister, fairly represent those parties defined in Section 48(1)(a) to (e) inclusive.
(3) The purpose of a development forum is to endeavour to reach agreement on matters on which agreement among those present is desirable, including the matters referred to in Part IV.
49. MATTERS REQUIRED BEFORE DEVELOPMENT FORUM.
(a) the applicant or intending applicant for a licence or licences has completed and presented to the Minister full-scale social mapping and landowner identification studies in accordance with Subsection 47(5); and
(b) the Minister is satisfied, on the basis of the results of those studies, that the people who would be project area landowners of the petroleum project are truly represented by the persons who are to be invited to the development forum as their representatives; and
(c) the applicant or intending applicant has submitted to the Minister, and to the Minister responsible for environmental matters, a socio-economic impact study as part of the environmental plan required under the Environmental Planning Act 1978; and
(d) the Director has prepared a proposal, after giving due consideration to the results of the full-scale social mapping and landowner identification studies and the socio-economic impact study and the principle set out in Section 170(3), for the equitable sharing of the equity benefit and the royalty benefit amongst project area landowners, and has provided that proposal to representatives of those future project area landowners.
50. DEVELOPMENT AGREEMENT.
(2) In addition to the matters referred to in Subsection (1), a development agreement may contain any other matter agreed between the parties.
50A. COORDINATION OF BENEFITS FOR GAS PROJECTS.
(a) licensees enter into aunit development under Section 64 or co-ordinated petroleum development under Section 65; or
(b) a gas agreement defines the extend of a particular gas project to include more than one licence,
the State and the project area landowners, the affected Local level-Governments and affected Provincial Governments may enter into a co-ordinated development agreement which may vary or replace an agreement or agreements in relation to petroleum projects under the former Act or a development agreement or agreements under this Act.
(2) A co-ordinated development agreement shall govern the matters subject to agreement referred to in Part IV of this Act and any other matter agreed to between parties.
51. POWER TO SIGN DEVELOPMENT AGREEMENT.
52. CONSULTATION WITH AFFECTED LOCAL-LEVEL GOVERNMENTS AND AFFECTED PROVINCIAL GOVERNMENTS.
(2) The Minister shall, in relation to any proposed petroleum project, consult with each Local-level Government and Provincial Government which would likely be an affected Local-level Government or affected Provincial Government of the petroleum project if developed, on the terms of–
(a) any written agreement to be entered into by the State in relation to the proposed petroleum project; and
(b) any licence to be granted in respect of the proposed petroleum project.
52A. COORDINATION OF DEVELOPMENT FORUM.
(2) An applicant shall pay a prescribed amount, not exceeding K250,000.00, as its contribution towards the cost of the development forum, if a development forum is required under Section 48.
(3) Where a coordinated development pursuant to a gas agreement requires the grant of additional licences or the variation of licences, then that coordinated development will require only a development forum to be held in respect of that gas agreement as part of the coordinated development represented in that gas agreement unless the Minister considers that those factors mentioned in Section 48(2) requires more than one development forum to be held in respect of that coordinated development.
Division 7.
Petroleum Development Licences.
53. APPLICATION FOR PETROLEUM DEVELOPMENT LICENCE.
(2) A licensee may, during the term of a petroleum prospecting licence or petroleum retention licence, make application to the Director for a petroleum development licence in respect of any block or blocks within the licence area–
(a) that he satisfies the Minister contains or contain a petroleum pool or part of a petroleum pool; and
(b) that do not at the time of making the application constitute a location.
(3) A person who is not the holder of a tenement in respect of that block or those blocks may make application to the Director for a petroleum development licence in respect of a block or blocks–
(a) that he satisfies the Minister contains or contain a petroleum pool or part of a petroleum pool; and
(b) that is not a block or are not blocks in respect of which a tenement is in force at the time of the application.
54. FORM OF APPLICATION FOR PETROLEUM DEVELOPMENT LICENCE.
(a) shall be in an approved form; and
(b) shall be made in an approved manner; and
(c) shall be accompanied by detailed proposals by the applicant for the construction, establishment and operation of all facilities and services for and incidental to the recovery, processing, storage and transportation of petroleum from the licence area; and
(d) may set out any other matters that the applicant wishes the Minister to consider; and
(e) shall be accompanied by the fee prescribed by Section 157.
(2) The Director may, by instrument served on the applicant, require him to furnish, within a period specified in the instrument–
(a) such further written information in connection with his application as the Director specifies in the instrument; and
(b) such proposals, in addition to or by way of alteration to any proposals that have already been furnished under Subsection (1) as the Director specifies in the instrument, including proposals relating to any of the matters referred to in Section 35(2); and
(c) such information and proposals, or information and proposals in addition to or by way of alteration to information and proposals already supplied, relating to–
(i) the acquisition by the State or its nominee of a participating interest in the petroleum project in respect of which the application is made; and
(ii) the transfer of some or all of the participating interest in an Orogen option project to the Company in accordance with the option agreement and other matters and transactions contemplated by the option agreement.
55. NOTICE OF APPLICATION TO BE PROVIDED TO THE COMPANY, ETC.
(2) At any time after receipt of a notice under Subsection (1), the Company may request the applicant to provide to the Company, or to allow the Company access to, such information concerning the application and the applicant’s proposals as the Company may reasonably require for the purpose of determining whether it will exercise its option under the option agreement in respect of the Orogen option project.
(3) On receipt of a request under Subsection (2), the applicant shall provide to the Company or allow the Company access to the information requested within such reasonable period as the Company may specify in its request on the condition that the Company–
(a) pays the reasonable costs of the applicant incurred in providing or allowing the Company access to the information requested; and
(b) subject to Subsection (4), keeps the information confidential on such terms and conditions as the applicant may reasonably require.
(4) The Company shall be permitted to disclose the information referred to in Subsection (2) to–
(a) such of its employees, officers or agents whose duties in connection with the exercise of the option require the disclosure of the information; and
(b) any adviser or other expert retained in connection with a proposal by the Company to exercise the option,
who undertakes to keep the information confidential on such terms and conditions as the applicant may reasonably require.
(5) A person who discloses the information referred to in Subsection (2) in contravention of the terms and conditions required by the applicant in accordance with Subsections (3)(b) or (4) is guilty of an offence.
Penalty: A fine not exceeding K10,000.00 or imprisonment for a term not exceeding four years or both.
56. NOTIFICATION OF GRANT OF PETROLEUM DEVELOPMENT LICENCE.
(a) that–
(i) he is prepared to approve the proposals wholly or in part, and to grant to the applicant on the basis of the approved proposals, a petroleum development licence in respect of the blocks specified in the application; and
(ii) the applicant will be required to lodge a security deposit for compliance with–
(A) the conditions relating to the protection and restoration of the environment; and
(B) the provisions of this Act; and
(C) any requirement in any law relating to the protection and restoration of the environment, or any condition imposed on the licensee under any such law; and
(D) any condition relating to the physical planning of the area; and
(iii) the applicant will be required to pay the first annual fee as a condition of the grant of the licence; or
(b) that he will defer consideration of a decision on the proposals until the applicant furnishes such proposals, in addition to or by way of alteration to the proposals furnished under Section 54 as the Minister specifies in the instrument, including proposals relating to any of the matters referred to in Section 35(2) or 54(2)(c); or
(c) that he is prepared to approve the proposals and to grant to the applicant a petroleum development licence in respect of the blocks specified in the application, subject to the applicant–
(i) making such alterations to the proposals; or
(ii) complying with such conditions in relation to the proposals,
as the Minister thinks reasonable.
(2) Where an application is made under Section 53(3), the Minister may–
(a) refuse to grant the application and advise the applicant accordingly; or
(b) treat the application as an application made under Section 53(1) or (2).
(3) Where, under Subsection (2), the Minister elects to treat an application as an application made under Section 53(1) or (2), that application shall, for the purposes of this section and Section 57, be deemed to be an application so made.
(4) In the case of an instrument to which Subsection (1)(c) applies, the Minister shall give to the applicant details of his reasons for requiring the alterations or imposing the conditions referred to in the instrument.
(5) An instrument under Subsection (1)(a), (b) or (c) shall contain a statement to the effect that the application will lapse if–
(a) the applicant does not furnish any further proposals that the Minister requires within such period as the Minister specifies in the instrument, being a period of not less than two months nor more than one year; or
(b) the applicant does not make a request under Section 57(1) in respect of the grant of the licence; or
(c) the applicant does not pay to the Director the first annual fee; or
(d) the applicant does not lodge with the Director the security specified in the instrument.
57. GRANT OR REFUSAL OF PETROLEUM DEVELOPMENT LICENCE.
(a) the period of three months after the date of service of the instrument on him or such further period or periods as the Minister allows; or
(b) the period specified by the Minister under Section 56(5)(a),
whichever is the later, by instrument served on the Minister–
(c) request the Minister to grant to him the licence to which the first-mentioned instrument relates; and
(d) furnish the Minister with any further proposals required under Section 56(1)(b); and
(e) pay the first annual fee to the Director; and
(f) lodge with the Director the security deposit referred to in the instrument issued under Section 56(1)(a).
(2) Where–
(a) an applicant has, within the period specified in Subsection (1)–
(i) made a request under Subsection (1)(c); and
(ii) paid the first annual fee to the Director; and
(iii) furnished the Minister with any further proposals required under Section 56(1)(b); and
(iv) lodged with the Director the security deposit referred to in the instrument issued under Section 56(1)(a); and
(b) the Minister is satisfied, having considered the applicant’s proposals and any further submissions of information, and a report from the Board and where it is available the relevant cost-benefit analysis carried out and made available to the National Executive Council by the National Economic and Fiscal Commission under Section 117(8)(a)(v) of the Organic Law on Provincial Governments and Local-level Governments, that the proposals for development–
(i) will achieve maximum efficient recovery and prevention of resource waste by applying good oilfield practice; and
(ii) do not interfere with the rights of licensees of adjacent tenements covering common petroleum pools; and
(iii) comply with the State’s policy on non-discriminatory access for other persons to any strategic pipelines or strategic petroleum processing facilities involved in the proposals; and
(iv) provide adequately for the protection of the environment and the welfare of the people of the area; and
(v)[44] demonstrate that the applicant has adequately identified the persons who are customary land owners in areas specified under Section 47(5); and
(vi) have duly considered co-ordinated development of any adjacent petroleum discoveries which studies and investigations conducted pursuant to a direction given under Section 65 reveal to be in the interest of the State; and
(vii) promote viable domestic utilisation of petroleum and petroleum products to the extent reasonably possible; and
(viii) will otherwise be in the best interests of the Independent State of Papua New Guinea,
the Minister shall approve the proposals and grant to the applicant a petroleum development licence in respect of the blocks referred to in Section 56(1)(c), but in any other case the Minister may, by instrument, refuse to grant the licence.
(3) The Minister shall not refuse under Subsection (2) to grant a petroleum development licence unless–
(a) he has, by the instrument referred to in Subsection (2) served on the applicant, given not less than one month’s notice of his intention to do so; and
(b) he has, in that instrument–
(i) given particulars of the reasons for his intention; and
(ii) specified a date on or before which the applicant may, by instrument served on the Minister, submit any matters that the applicant requires the Minister to consider, including new proposals generally or in respect of some particular matter; and
(c) he has given to the applicant, and to any persons whom the applicant thinks fit to consult, a full opportunity to consult with the Minister concerning the Minister’s intention to refuse to grant the licence; and
(d) he has taken into account, after considering a report from the Board, any matters raised in the course of such consultations by the applicant or by any other person referred to in Paragraph (c).
(4) Where the grounds for the Minister’s refusal, under this section, of an application is that the applicant’s proposals or further proposals do not satisfy the requirements of Subsection (2)(b), the applicant may, by written notice to the Minister before the date referred to in Subsection (3)(b)(ii), require that the question be referred to arbitration.
(5) The method of arbitration for the purpose of Subsection (4) may be the subject of a written agreement between the State and the applicant, and the method so agreed will be binding on the Minister.
(6) Where the method of arbitration is not the subject of an agreement referred to in Subsection (5), the matter stands referred to arbitration in accordance with the Arbitration Act 1951 on receipt by the Minister of the requirement.
(7) Where a matter is referred to arbitration under this section, the application does not lapse until the arbitrator has made his award and, where the award is made in the applicant’s favour, the Minister has granted the petroleum development licence.
(8) Subject to Subsection (7), where an applicant has been served with an instrument under Subsection (2) refusing to grant an application, the application lapses at the end of the period referred to in Subsection (3)(b)(ii) unless the Minister withdraws his refusal.
(9) Where a licensee makes application under Section 53(1) or (2) for a petroleum development licence and the petroleum prospecting licence or petroleum retention licence would but for this subsection expire before the application has been dealt with in accordance with this section, the petroleum prospecting licence or petroleum retention licence, as the case may be, shall, notwithstanding the provisions of Division 2 or 4 as to the expiry thereof, continue in force in respect of the block or blocks until the first-mentioned application has been dealt with.
(10) The Minister shall not grant a petroleum development licence under this section in relation to an Orogen option project unless the Minister has first given to the Company written notice.
58. VARIATION OF PETROLEUM DEVELOPMENT LICENCE.
(a) having a side or sides in common, or touching, block the subject of the petroleum development licence; and
(b) subject to Subsection (2), not being the subject of a tenement held by a person other than the applicant.
(2) The holder of a petroleum development licence may make an application under Subsection (1) for the inclusion of an additional block or group of blocks even they are the subject of a tenement held by a person other than the applicant if –
(a) the holder of the tenement in respect of the additional block or groups of blocks has entered into an agreement in writing with the holder of the petroleum development licence consenting to the variation; and
(b) the State or Company pursuant to Section 165 and 166 and the applicable petroleum agreement have an entitlement to acquire a participating interest in the additional blocks or group of blocks, and all of the affected tenement holders including the holder of the petroleum development licence, have entered into an agreement concerning the terms of the State or Company participation in the enlarged petroleum licence; and
(c) a copy of any such agreement is provided to the Minister with the application for the variation; and
(d) any such agreement provided to the Minister shall have been lodged and registered in accordance with Section 100.
(3) The Minister shall not approve an application under Subsection (1) unless he is satisfied, after considering a report of the Board, that the additional block or group of blocks proposed to be included in the licence contain a petroleum pool or part of a petroleum pool.
(4) Where an application is made under Subsection (1), the Minister shall, after considering a report of the Board and having used all reasonable efforts, by instrument served on the applicant within one month from having received the application either –
(a) inform the applicant that the variation of the licence by the inclusion of the additional block or group of blocks as the case may be will be approved; or
(b) refuse the application in which case the existing licences remain in full force and effect.
(5) An applicant who has been served with an instrument under Subsection (4)(a) may, within one month after the date of service of the instrument on him or such further period as the Minister allows, by instrument served on the Director accept the variation and upon service of such instrument or the Director, the petroleum development licence shall be varied to include in the licence area the block or group of blocks to which the application relates.
(6) From and including the day on which the variation of a licence takes effect under Subsection (5), the blocks included in the licence area by reason of the variation are –
(a) subject to this Act, for the remainder of the term of the licence, blocks in respect of which an applicant’s petroleum development licence is in force; and
(b) any other licence that is in force in respect of the blocks so included is revoked in respect of those blocks.
(7) The holders of a petroleum development licence may, at any time, make an application to the Minister for any other variation of the petroleum development licence.
(8) An application under Subsection (7) shall –
(a) specify the reason for the proposed variation; and
(b) be made in an approved form and contain the information specified in Section 54.
(9) The Director may require the applicant to furnish such information in connection with his application as the Director considers necessary.
(10) Following receipt of an application under Subsection (7) the Minister shall, after considering a report of the Board and any matters submitted to him under this section and having used all reasonable efforts, by instrument served on the applicant within two months from the date of receiving the application –
(a) inform the applicant that he is prepared to approve the variation of the licence as stipulated in the application or as otherwise agreed with the applicant; or
(b) refuse the application, in which case the existing petroleum development licence will remain in full force and effect.
(11) An applicant who has been served with an instrument under Subsection (10)(a) may, within one month after the date of service of the instrument on him or such further periods as the Minister allows, by instrument served on the Director accept the variation and upon service of such instrument on the Director the petroleum development licence shall be varied as stipulated in the application or as otherwise agreed with the applicant.
59. RIGHTS CONFERRED BY PETROLEUM DEVELOPMENT LICENCE.
(a) to explore for petroleum in the licence area; and
(b) to carry on operations for the recovery of petroleum in the licence area; and
(c) to sell or otherwise dispose of the petroleum so recovered; and
(d) to carry on such operations and execute such works in the licence area as are necessary for or in connection with the purposes specified in Paragraphs (a), (b), and (c) including the construction and operation of flow lines or gathering lines and water lines.
60. TERM OF PETROLEUM DEVELOPMENT LICENCE.
(a) for a period of 25 years commencing on the day on which the licence takes effect; and
(b)[47] where the licence has been extended under Section 62–for such further period or periods not exceeding 20 years as the Minister determines is reasonably required to recover from the licence area the maximum amount of petroleum the recovery of which is consistent with good oil field practice.
61. APPLICATION FOR EXTENSION OF PETROLEUM DEVELOPMENT LICENCE.
(2)[48] [49]Unless otherwise provided in a written agreement entered into between the holder of the petroleum development licence and the State, an application under this section may be made once only in respect of a licence.
(3) An application for an extension of a petroleum development licence–
(a) shall be in an approved form; and
(b) subject to Subsection (4), shall be made in an approved manner not later than six months before the day on which the licence is due to expire; and
(c) shall be accompanied by–
(i) a detailed assessment of the field life and the economically recoverable and economically unrecoverable petroleum within the pool or pools which are the subject of the licence, providing a justification for the assessment of petroleum as economically recoverable or unrecoverable, as the case may be; and
(ii) a detailed statement of anticipated future operations under the licence; and
(iii) the fee prescribed by Section 157.
(4)[50] [51]The Minister may, after considering a report of the Board, accept an application at any time prior to the last year of the current term of the licence where that application also relates to a variation of a petroleum development licence pursuant to Section 58(7) and the applicant can demonstrate that the remaining period of current term of licence is insufficient to permit the maximum recovery of the petroleum from the licence area.
62. GRANT OR REFUSAL OF EXTENSION OF PETROLEUM DEVELOPMENT LICENCE.
(2) Where a licensee who has not complied with the conditions specified in the licence or with the provisions of this Act, makes an application under Section 61 for the extension of a licence, the Minister may, if after considering a report from the Board, he is satisfied that, although the licensee has not so complied, special circumstances exist that justify the granting of the extension of the licence, inform the licensee, by instrument served on the licensee, that he is prepared to grant to him an extension of the licence.
(3) If a licensee has not complied with the conditions specified in the licence or with the provisions of this Act, and the Minister is not satisfied that special circumstances exist that justify the granting of the extension of the licence, the Minister shall, subject to Subsection (4), by instrument served on the licensee, refuse to grant the extension of the licence.
(4) The Minister shall not refuse to grant the extension of a licence under this section unless–
(a) he has, by instrument served on the licensee, given not less than one month’s notice of his intention to refuse to grant the extension of the licence; and
(b) he has served a copy of the instrument on such other persons (if any) as he thinks fit; and
(c) he has, in the instrument–
(i) given particulars of the reasons for his intention to refuse; and
(ii) specified a date on or before which the licensee or a person on whom a copy of the instrument is served may, by instrument served on the Minister, submit any matters that he requires the Minister to consider; and
(d) he has taken into account, after considering a report from the Board, any matters so submitted to him, on or before the specified date, by the licensee or a person on whom a copy of the instrument has been served.
(5) An instrument under Subsection (1) or (2) shall contain–
(a) a summary of the conditions to which the grant of the extension is to be subject; and
(b) a statement to the effect that the application will lapse if the licensee–
(i) does not make a request under Subsection (6); and
(ii) does not pay the annual fee.
(6) A licensee who has been served with an instrument under Subsection (1) or (2) may, within a period of one month after the date of service of the instrument on him–
(a) by instrument served on the Minister, request the Minister to grant to him the extension of the licence; and
(b) pay the next annual fee.
(7) Where a licensee who has been served with an instrument under Subsection (1) or (2) has, within the period specified in Subsection (6)–
(a) made a request under Subsection (6); and
(b) paid the next annual fee,
the Minister shall grant to him the extension of the licence.
(8) Where a licensee who has been served with an instrument under Subsection (1) or (2) has not, within the period specified in Subsection (6)–
(a) made a request under Subsection (6); or
(b) paid the next annual fee,
the application lapses at the end of that period.
(9) Where–
(a) an application for the extension of a licence is made under Section 61; and
(b) the licence expires–
(i) before the Minister grants, or refuses to grant, the extension of the licence; or
(ii) before the application lapses under Subsection (8),
the licence shall be deemed to continue in force in all respects–
(c) until the Minister refuses to grant the extension of the licence; or
(d) until the application lapses under Subsection (8),
whichever first occurs.
63. CONDITIONS OF PETROLEUM DEVELOPMENT LICENCE.
(a) is subject to conditions that–
(i) the licensee will carry out the proposals approved under Section 57(2); and
(i) the licensee will provide to the Director reports on the activities of the licensee in respect of the licence containing such information and at such frequency as are specified in and will otherwise comply with any direction given under Section 148; and
(iii)[53] the licensee will carry out social mapping and landowner identification studies as directed by the Minister in accordance with Section 47; and
(b) may be made subject to such other conditions not inconsistent with this Act–
(i) as the Minister thinks proper and specifies in the licence or extension of the licence; or
(ii) in respect of any matter or matters arising out of the applicant’s proposals referred to in Section 54(1)(c) that are not administered under this Act, as the Minister, after consultation with the Minister responsible for administering that matter or those matters, thinks proper and specifies in the licence or extension of the licence.
64. UNIT DEVELOPMENT.
(2) The Minister may of his own motion or on written application made to him by a licensee in whose licence area there is a part of a particular petroleum pool, after receiving the advice of the Board, for the purpose of securing the more effective recovery of petroleum from that petroleum pool, direct any licensee whose licence area includes part of that petroleum pool to enter into a written agreement within the period specified by the Minister for or in relation to the unit development of the petroleum pool, and to lodge the agreement with the Minister immediately for approval and registration in accordance with Section 100.
(3) Where–
(a) a licensee who is directed under Subsection (2) to enter into an agreement for or in relation to the unit development of a petroleum pool does not enter into such an agreement within the specified period; or
(b) a licensee enters into such an agreement but the agreement is not lodged with the Minister in accordance with Subsection (2), or if so lodged is not approved under Section 100,
the Minister may, by instrument served on the licensee, direct the licensee to submit to him, within the period specified in the instrument, a scheme for or in relation to the unit development of the petroleum pool.
(4) An agreement under this section is an instrument to which Section 100 applies.
65. CO-ORDINATED PETROLEUM DEVELOPMENTS.
(2) A licensee given a direction under this section shall, within the period, if any, and in accordance with any other directions specified in the instrument, conduct such studies and investigations into the possibilities and merits of a co-ordinated petroleum development as are specified in the direction.
66. DIRECTIONS AS TO RECOVERY OF PETROLEUM.
(2) Where the Director is not satisfied with the steps taken or being taken by a licensee to whom a direction has been given under Subsection (1), the Director may, by instrument served on the licensee, give to the licensee such directions as the Director thinks necessary for or in relation to the recovery of petroleum in the licence area.
(3) Where petroleum is being recovered in a licence area, the Minister may, with the advice of the Board, by instrument served on the licensee, direct the licensee to take all necessary and practical steps to increase or reduce the rate at which the petroleum is being recovered to such rate, not exceeding the capacity of existing production facilities, as the Minister specifies in the instrument.
(4) Where the Director is not satisfied with the steps taken or being taken by a licensee to whom a direction has been given under Subsection (3), the Director may, by instrument served on the licensee, give to the licensee such directions as the Director thinks necessary for or in relation to the increase or reduction of the rate at which petroleum is being recovered in the licence area.
67. DOMESTIC MARKET OBLIGATION.
(2) A person referred to in Subsection (1) shall–
(a) if approached by a bona fide prospective purchaser wishing to purchase processed petroleum from that person, negotiate in good faith with that bona fide purchaser for the sale and supply of such processed petroleum; and
(b) if offered by a bona fide prospective purchaser equivalent export terms for a quantity of his processed petroleum, sell and supply that quantity of processed petroleum to that bona fide prospective purchaser on those equivalent export terms.
(3) In this section, “equivalent export terms” means a purchase price and terms which are no less favourable to the seller than the price and terms which he could obtain at that same time as such offer by selling and exporting that processed petroleum, adjusted for such differences as quality, quantity, delivery, transportation, and other terms, but excluding government-to-government sales, barter, swaps, sales between related corporations, and similar non-arms-length transactions.
(4) A person referred to in Subsection (1) shall, if offered equivalent export terms, accommodate the reasonable requirements of the offer or for adjustments from the normal practices of that person in selling and delivering processed petroleum in relation to quantities sold, delivery arrangements and transportation requirements.
(5) The obligations of a person under this section are subject to–
(a) the purchaser within a reasonable time offering to enter into an agreement containing commercial sale and purchase terms which are standard in the international petroleum industry, including payment in a currency appropriate for that processed petroleum having regard to normal international industry standards at a place acceptable to the seller within a reasonable time after delivery; and
(b) prior bona fide contractual commitments of the seller in respect of the sale or consumption of such processed petroleum; and
(c) the reasonable requirements of the seller as to the timing of the disposal of his processed petroleum and the creditworthiness of the purchaser; and
(d) the seller being at liberty to sell his processed petroleum in Papua New Guinea for a higher price or on terms which objectively are preferable, and for that purpose to retain in Papua New Guinea that quantity of processed petroleum; and
(e) the seller being at liberty to use any processed petroleum required for his own operations; and
(f) the provisions of any written agreement between the State and that person; and
(g) the requirements of all laws for the time being in force in Papua New Guinea.
(6) A bona fide prospective purchaser aggrieved at the failure of another person to comply with his obligations under this section shall have standing to seek injunctive relief and damages from a person who has failed to comply with his obligations under this section.
Division 8.
Processing and Export of Natural Gas.
68. PROCESSING OF NATURAL GAS.
(a) reinjected; or
(b) flared in accordance with this Act; or
(c) consumed in Papua New Guinea in operations under a licence.
(2) All natural gas produced in a petroleum project shall be processed in a petroleum processing facility in Papua New Guinea.
69. EXPORT OF NATURAL GAS.
(a) the terms of a written agreement to which the State is a party; or
(b) a licence; or
(c) the Minister, by instrument.
(2) Subject to Subsection (3), any natural gas which is exported from Papua New Guinea shall conform with quality specifications prescribed by the Minister, by instrument.
(3) In the event of an emergency affecting the operation of a petroleum processing facility which processes natural gas which is permitted to be exported in accordance with Subsection (1), natural gas which does not conform with the quality specifications stipulated by Subsection (2) may be exported, but–
(a) within 24 hours of the emergency occurring, the exporter shall file a report with the Director setting out the details of the emergency, the steps being taken to deal with it and the reason why natural gas conforming with the quality specifications stipulated by Subsection (2) is not being produced; and
(b) the exporter shall not continue to export natural gas not conforming with the specifications for more than 72 hours after first doing so, without written permission from the Director or the Minister.
(4) An exporter relying upon a written permission granted under Subsection (3) shall, whilst the emergency continues, only export natural gas in accordance with the terms of the written permission.
(5) A written permission granted under Subsection (3) may be varied or revoked by the author.
Division 9.
Pipeline Licences.
70. PIPELINE LICENCE REQUIRED.
(2) A person who commences to construct or continues the construction of or operates or alters or reconstructs a pipeline otherwise than pursuant to a pipeline licence is guilty of an offence.
Penalty: A fine not exceeding K10,000.00 for each day of the offence.
71. ACTS DONE IN AN EMERGENCY.
(a) if, in an emergency, a person does an act to avoid loss or injury or to maintain the pipeline in good order and repair and notifies an inspector as soon as practicable of the act done; or
(b) if a person does an act in compliance with a direction given under this Act.
72. REMOVAL OF PIPELINE.
(a) to make such alterations to the pipeline as are specified in the instrument; or
(b) to move the pipeline to a specified area or to remove it entirely,
within the period specified in the instrument.
(2) For the purpose of Subsection (1), the appropriate person is–
(a) where construction of the pipeline has been completed–its owner; or
(b) where the construction of the pipeline has not been completed–the persons for whom it is being constructed.
(3) Where a person who has been served with an instrument under Subsection (1) does not, within the period specified in the instrument, comply with the direction, the Director may do all or any of the things required by the direction to be done.
(4) Any costs and expenses incurred by the Director under Subsection (3) are a debt due from the person referred to in that subsection to the State.
73. APPLICATION FOR PIPELINE LICENCE.
(2) An application for a pipeline licence–
(a) shall be in an approved form; and
(b) shall be made in an approved manner; and
(c) shall be accompanied by particulars of–
(i) the proposed design and construction of the pipeline; and
(ii) the proposed size and capacity of the pipeline; and
(iii) the proposals of the applicant for work and expenditure in respect of the construction of the pipeline; and
(iv) the technical qualifications of the applicant and his employees; and
(v) the technical advice available to the applicant; and
(vi) the financial resources available to the applicant; and
(vii) any agreement entered into, or proposed to be entered into, by the applicant for or in relation to the supply or conveyance of petroleum by means of the pipeline; and
(d) shall be accompanied by a plan, drawn to an approved scale, showing–
(i) the route to be followed by the pipeline; and
(ii) the sites of pumping stations, tank stations, and valve stations to be part of or used in connection with the pipeline; and
(e) may set out any matter that the applicant wishes the Minister to consider; and
(f) shall be accompanied by the fee prescribed by Section 157.
(3) Where a proposed pipeline is in any part of a physical planning area under the Physical Planning Act 1989, the applicant for the pipeline licence shall–
(a) notify the National Physical Planning Board; and
(b) notify any Physical Planning Board under the Physical Planning Act 1989 within whose jurisdiction the proposed pipeline lies; and
(c) provide these Physical Planning Boards with a copy of the plan referred to in Subsection (2)(d),
and these Physical Planning Boards may, within 28 days of the receipt of such notification, give their views on the application to the Minister.
(4) Where a notice under Subsection (1) of an application by a person for a pipeline licence in respect of the construction of a project pipeline for the conveyance of petroleum recovered or to be recovered from a petroleum development licence is published in the National Gazette, the registered holder of that petroleum development licence may, within a period of two months after the date of publication, make an application to the Minister for such a pipeline licence and, in the application, request that the application referred to in the notice be rejected.
(5) Where a pipeline licence is granted to a registered holder of a petroleum development licence on an application under Subsection (4), the Minister shall, by instrument served on the original applicant, reject the application referred to in the notice under Subsection (1).
(6) The Director may, at any time, by instrument served on a person who has made an application under this section, require him to furnish such written information in connection with his application as the Minister considers necessary.
(7) An application for a pipeline licence in respect of a strategic pipeline shall, in addition to the matters set out in Subsection (2), be accompanied by–
(a) draft access arrangements which the applicant proposes should be the access arrangements applying to that strategic pipeline; and
(b) pro forma accounts for the pipeline and the other petroleum processing facilities referred to in Section 75(7), and an explanation of how the financial records for the pipeline will be maintained separately from other operations of the pipeline licensee.
(8) Prior to submitting an application for a pipeline licence in respect of a strategic pipeline, the applicant shall make all reasonable efforts to consult with existing and potential third party users of the pipeline, and shall furnish to the Minister a report on the possible third party users and their possible requirements in using the pipeline and their views on the contents of the access arrangements to apply to the pipeline.
(9)[58] [59]Where an application for a pipeline licence relates to a strategic pipeline, the notice referred to in Subsection (1) shall invite potential third party users of the pipeline to make submissions to the Minister within the period stipulated in the notice as to their potential requirements in using the pipeline and the contents of the access arrangements to apply to the pipeline.
(10) The draft access arrangements submitted by the applicant shall be a public document, and any person may inspect that document or those documents at the office of the Director.
(11) The Minister shall notify the applicant of any submissions received in response to invitations made in accordance with Subsection (9) and provide the applicant with a copy of all such submissions if requested.
74. GRANT OR REFUSAL OF PIPELINE LICENCE.
(a) shall, if that person–
(i) is the registered holder of that petroleum development licence; and
(ii)[60] has complied with the conditions specified in the licence and with the provisions of this Act; or
(b) may, if that person is not the registered holder of that petroleum development licence and the application has not been rejected under Section 73(5),
inform that person, by instrument served on him, that the Minister is prepared to grant a pipeline licence to him.
(2) Where–
(a) an application is made in accordance with Section 73 for a pipeline licence in respect of the construction of a project pipeline for the conveyance of petroleum recovered or to be recovered from a petroleum development licence, by a person who is the registered holder of that petroleum development licence; and
(b) that person has not complied with the conditions specified in that licence or with the provisions of this Act,
the Minister may inform that person, by instrument served on him, that–
(c) he is prepared to grant a pipeline licence to that person; or
(d) he has refused to grant a pipeline licence to that person.
(3) The Minister shall not, under Subsection (2), refuse to grant a pipeline licence unless–
(a) he has, by instrument served on the person who made the application, given to that person not less than one month’s notice of his intention to refuse to grant the pipeline licence; and
(b) he has served a copy of the instrument on such other persons as he thinks fit; and
(c) he has, in the instrument–
(i) given particulars of the reasons for his intention; or
(ii) specified a date on or before which the person who made the application or a person on whom a copy of the instrument is served may, by instrument served on the Director, submit any matters that he wishes the Minister to consider; and
(d) he has taken into account any matters so submitted to him on or before the specified date by the person who made the application, or by a person on whom a copy of the instrument has been served.
(4) Where an application is made in accordance with Section 73 for a pipeline licence in respect of the construction of a pipeline for the conveyance of petroleum recovered or to be recovered from a petroleum development licence by a person other than the registered holder of that petroleum development licence, the Minister may, by instrument served on the applicant, refuse to grant a pipeline licence.
(5) Where the Minister is required, or proposes, to serve on a person an instrument under Subsection (1) or (2)(c), he shall, by the instrument, inform that person that he will be required to lodge a security for compliance with the conditions to which the pipeline licence, if granted, will from time to time be subject, and with the provisions of this Act.
(6) An instrument under Subsection (1) or (2)(c)–
(a) shall specify the route to be followed by the pipeline; and
(b) shall contain a summary of the conditions to be specified in the pipeline licence to be granted; and
(c) shall contain a statement to the effect that the application will lapse if the applicant does not–
(i) make a request under Subsection (8); and
(ii) lodge with the Director the security referred to in the instrument.
(7) The route to be specified in an instrument under Subsection (1) or (2)(c) shall be–
(a) the route shown in the plan accompanying the application; or
(b) if the Minister is of the opinion that, for any reason, that route is not appropriate–a route that, in the opinion of the Minister, is appropriate.
(8) A person who has been served with an instrument under Subsection (1) or (2)(c) may, within a period of three months after the date of service of the instrument on him or such further period or periods as the Minister allows–
(a) by instrument served on the Director, request the Minister to grant to him the pipeline licence; and
(b) lodge with the Director the security referred to in the instrument served on him under that subsection.
(9) Where a person who has been served with an instrument under Subsection (1) or (2)(c) has, within the period specified in Subsection (8)–
(a) made a request under Subsection (8); and
(b) lodged with the Director the security referred to in the instrument,
the Minister shall grant to that person a licence to construct and operate a pipeline specified in the instrument.
(10) Where a person who has been served with an instrument under Subsection (1) or (2)(c) has not, within the period specified in Subsection (8)–
(a) made a request under Subsection (8); or
(b) lodged with the Director the security referred to in the instrument,
the application lapses at the end of that period.
(11) Where a pipeline licence is not granted on an application, 90% of the fee under Section 157 shall be refunded to the applicant.
(12) Where a person makes application in accordance with Section 73 for a pipeline licence in respect of a strategic pipeline, the Minister, after having regard to physical planning considerations, may inform that person, by instrument served on him, that–
(a) the Minister is prepared to grant a pipeline licence to that person; or
(b) the Minister has refused to grant a pipeline licence to that person.
(13) The Minister shall only refuse under Subsection (12) to grant a pipeline licence after considering the advice of the Board.
(14) Where the Minister proposes to serve an instrument under Subsection (12)(a), he shall, by the instrument, inform that person that he will be required to lodge a security for compliance with the conditions to which the pipeline licence, if granted, will from time to time be subject, and with the provisions of this Act.
(15) An instrument under Subsection (12)(a)–
(a) shall specify the route to be followed by the pipeline; and
(b) shall contain the conditions to be specified in the pipeline licence to be granted; and
(c) shall specify the terms of the access arrangements, complying with Section 75, that will be approved by the Minister and apply to the pipeline in accordance with Section 75; and
(d) shall contain a statement to the effect that the application will lapse if the applicant does not–
(i) make a request under Subsection (17); and
(ii) lodge with the Director the security referred to in the instrument.
(16) The route to be specified in the instrument under Subsection (12)(a) shall be–
(a) the route shown in the plan accompanying the application; or
(b) if the Minister, in accordance with the advice of the Board, considers for any reason that that route is not appropriate–a route that the Minister, in accordance with the advice of the Board, considers appropriate.
(17) A person who has been served with an instrument under Subsection (12)(a) may, within a period of three months after the date of service of the instrument on him, or such longer period as may be specified in the instrument–
(a) by instrument served on the Director, request the Minister to grant to him the pipeline licence; and
(b) lodge with the Director the security referred to in the instrument served on him under Subsection (12)(a).
(18) Where a person who has been served with an instrument under Subsection (12)(a) has, within the period specified in Subsection (17) or such longer period or periods as the Minister allows–
(a) made a request under Subsection (17); and
(b) lodged with the Director the security referred to in the instrument,
the Minister shall approve the access arrangements specified in the instrument and grant to that person a pipeline licence conforming with the instrument.
(19) Where a person who has been served with an instrument under Subsection (12)(a) has not, within the period specified in Subsection (17)–
(a) made a request under Subsection (17); and
(b) lodged with the Director the security referred to in the instrument,
the application lapses at the end of that period.
(20) A pipeline licence shall not be granted under this section in respect of a strategic pipeline unless the Minister has approved access arrangements complying with Section 75 and the applicant has accepted those access arrangements in accordance with Subsection(17).
75. STRATEGIC PIPELINES.
(a) pipelines constructed for the transportation of petroleum from two or more petroleum projects, or for the transportation of petroleum products from two or more petroleum processing facilities; and
(b) pipelines constructed for the transport of petroleum or petroleum products across an international boundary; and
(c) pipelines constructed for the transportation of petroleum or petroleum products from a strategic petroleum processing facility; and
(d) pipelines in respect of which the applicant for a pipeline licence elects that this section will apply; and
(e) pipelines which become strategic pipelines in accordance with Subsections 81(10) or 82(12).
(2) The pipeline licensee under a pipeline licence applying to a strategic pipeline shall adopt and comply with access arrangements approved by the Minister, whereby third parties may have petroleum or petroleum products transported by the pipeline licensee through that strategic pipeline.
(3) The access arrangements applying to a strategic pipeline shall be registered and the pipeline licensee shall make copies available to all prospective third party users requesting a copy of them.
(4) Subject to any written agreement between the State and the pipeline licensee, access arrangements applying to strategic pipelines–
(a) shall comply with the requirements of regulations on the operation of strategic pipelines; and
(b) shall comply with the following principles:–
(i) the arrangements should encourage third party use of the pipeline, without requiring reduced tariffs for marginally economic petroleum fields or petroleum processing facilities;
(ii) the arrangements should achieve the lowest sustainable tariffs for users which provide a reasonable return on investment for the pipeline licensee, having regard to the circumstances of the investment, including due consideration of risk;
(iii) the arrangements should provide commercial incentives for investors and foundation shippers in respect of risks assumed, improved efficiency and increased throughputs;
(iv) the arrangements should provide certainty of tariff methodology for the term of the transportation contract;
(v) the arrangements should constitute an open dissemination of information regarding the pipeline and the service available, so as to enable prospective third party users to evaluate the technical and economic feasibility of transporting petroleum or petroleum products using any spare capacity or developable capacity;
(vi) the arrangements should recognise the entitlement of the pipeline licensee to be assured as to the creditworthiness of third party users of the pipeline prior to entering into contracts for service;
(vii) the arrangements should recognise the legitimate business interests of the pipeline licensee and existing and potential third party users; and
(c) shall include–
(i) the route of the pipeline and the location and ownership of receipt and delivery facilities; and
(ii) reasonable definitions of total capacity, excess capacity, and developable capacity of the pipeline; and
(iii) a process for identifying the need for, and implementing, expansion to take up the pipeline’s developable capacity; and
(iv) reasonable processes that may lead to the extension or expansion of the pipeline if demonstrated to be commercially, technically, and operationally viable; and
(v) a procedure for requesting service and concluding transportation arrangements within a reasonable period of time; and
(vi) the classes of transportation service offered to third parties by the pipeline licensee, separating the charges and tariffs to be charged in respect of each class of service; and
(vii) the terms and conditions of the agreement to be offered by the pipeline licensee and third-party users for the transportation of petroleum or petroleum products; and
(viii) tariff methodology, with sample calculations; and
(ix) billing and payment arrangements; and
(x) processes for the inclusion of additional receipt and delivery points on the system; and
(xi) procedures for nominations for deliveries under a transportation agreement; and
(xii) a queuing policy in respect of competing proposals for use of the pipeline; and
(xiii) a mechanism for inter-shipper trading of service entitlements under transportation agreements, without derogating from the safety or integrity of pipeline operations; and
(xiv) a policy for allocation of pipeline capacity in the event of capacity restrictions from time to time; and
(xv) a dispute resolution procedure; and
(xvi) reasonable pipeline entry quality specifications which are not unfairly discriminatory to third party users, and where necessary intended procedures for system balancing and adjustments for differences in quality of petroleum or petroleum products entering the pipeline; and
(xvii) the expected pipeline operating pressure regime; and
(d) may include–
(i) different terms and conditions for foundation users of the pipeline which are commensurate with the different obligations undertaken and risks assumed by those users; and
(ii) any other provisions consistent with the normal international practice for open access pipelines which are approved by the Minister.
(5) Access arrangements approved by the Minister under Subsections 74(18), 81(8), 82(8) or 82(11) shall, for as long as the pipeline licence remains in force, be binding on the pipeline licensee and compliance with those access arrangements shall be a condition of the pipeline licence.
(6) The access arrangements referred to in Subsection (5) shall have legal effect and shall be enforceable according to their terms in a court of law by any person having a bona fide interest in the terms of the access arrangements.
(7) The pipeline licensee of a strategic pipeline shall maintain separate financial records and accounts for the operation of the pipeline, together with such other petroleum processing facilities as are agreed in writing between the Director and the pipeline licensee, and shall if requested by the Director lodge with the Director by the end of April in each calendar year a set of audited accounts for the strategic pipeline operations which accord with international generally accepted accounting practice setting out the financial results of the strategic pipeline and those other petroleum processing facilities.
(8) Nothing in this section limits the terms and conditions which a pipeline licensee may agree with a third party user as the terms of an access arrangement.
(9)[61] [62]Where a strategic pipeline is constructed as part of a petroleum project or a gas project and is linked to a strategic petroleum processing facility, which is also processing facility licensee may submit to the Minister for approval one access arrangement for such strategic pipeline and strategic petroleum processing facility, which may include a single published tariff for integrated processing and transportation.
76. RIGHTS CONFERRED BY PIPELINE LICENCE.
(a) to construct and operate a pipeline (including the pumping stations, tank stations and valve stations specified in the licence) of the design, construction, size and capacity specified in the licence, along the route specified in the licence; and
(b) to carry on all operations, to execute all works and to do all other things that are necessary for or incidental to the construction and operation of the pipeline.
77. TERM OF PIPELINE LICENCE.
(a) for a period of 25 years commencing on the day on which the licence takes effect; and
(b)[63] where the licence is extended under Section 79–for consecutive period or periods, not exceeding 20 years, as the pipeline licensee requires.
(2) Where the Minister is of the opinion that, having regard to the dates of expiration of the petroleum development licences that relate to the licence area from which the petroleum is, or is to be, conveyed by means of the pipeline it is not necessary for the pipeline licence to remain in force for the relevant period referred to in Subsection (1), the Minister may specify in the licence such lesser period as he thinks fit, and the pipeline licence shall remain in force for that lesser period so specified.
78. APPLICATION FOR EXTENSION OF PIPELINE LICENCE.
(a) in the case of a pipeline licence for a project pipeline where no written agreement has been entered into between the holder of the pipeline licence and the State allowing for multiple extensions – once only; and
(b) in the case of a pipeline licence for a project pipeline where a written agreement has been entered into between the holder of the pipeline licence and the State allowing for multiple extensions – that number of times provided for in that agreement; and
(c) in the case of a pipeline licence for a strategic pipeline – unlimited number of occasions.
(2) An application for the extension of a pipeline licence–
(a) shall be in an approved form; and
(b) shall be made in an approved manner not later than six months before the day on which the pipeline licence is due to expire; and
(c) shall be accompanied by the fee prescribed by Section 157; and
(d) shall specify the period, not exceeding 20 years, for which the extension is sought.
(3)[66] [67]The Minister may, after considering a report of the Board, accept an application at any time prior to the last year of the current term of the licence where that application also relates to a variation of a pipeline licence pursuant to Section 58(7) or an application for a new pipeline licence and the applicant can demonstrate that the remaining period of the current term of the licence is insufficient to permit the transportation of petroleum from the one or more petroleum development licence areas.
79. GRANT OR REFUSAL OF EXTENSION OF PIPELINE LICENCE.
(a) shall, if the pipeline licensee has complied with the conditions specified in the pipeline licence and with the provisions of this Act; or
(b) may, if the pipeline licensee has not complied with the conditions specified in the licence and with the provisions of this Act, and the Minister is satisfied that, although the pipeline licensee has not so complied, special circumstances exist that justify the granting of the extension of the pipeline licence,
inform the licensee, by instrument served on the licensee–
(c) that he is prepared to grant to the licensee the extension of the pipeline licence; and
(d) that the licensee will be required to lodge a security for compliance with the conditions to be specified in the pipeline licence, if the extension is granted, and with the provisions of this Act.
(2) The Minister shall not, under Subsection (1), refuse to grant a pipeline licence to a licensee unless–
(a) he has, by instrument served on the licensee, given not less than one month’s notice of his intention to refuse to grant the pipeline licence; and
(b) he has served a copy of the instrument on such other persons as he thinks fit; and
(c) he has, in the instrument–
(i) given particulars of the reasons for his intention to refuse; and
(ii) specified a date on or before which the licensee or a person on whom a copy of the instrument has been served may, by instrument served on the Minister, submit any matters that he wishes the Minister to consider; and
(d) he has taken into account any matters so submitted to him, on or before the specified date, by the licensee, or by a person on whom a copy of the instrument has been served.
(3) Where an application for the extension of a pipeline licence is made under Section 78 and the pipeline licence otherwise expires before the Minister grants or refuses to grant the extension of the pipeline licence, the pipeline licence shall be deemed to continue in force in all respects until the Minister refuses to grant the extension of the pipeline licence.
80. CONDITIONS OF PIPELINE LICENCE.
81. VARIATION OF PIPELINE LICENCE ON APPLICATION BY LICENSEE.
(a) extend the specified route of the pipeline; or
(b) include additional receipt and delivery points; or
(c) construct additional pipelines using the same route specified in the pipeline licence; or
(d) install pumping stations, compressors, valve stations, measurement stations, storage tanks or other improvements for the safety and operation of the pipeline or to increase its capacity; or
(e) convert a pipeline to transport a different form of petroleum or petroleum product from the petroleum or petroleum products described in the initial licence application; or
(f) make any other change which would improve the operating efficiency of the pipeline; or
(g) in the case of a project pipeline, change its designation to a strategic pipeline; or
(h) in the case of a strategic pipeline, vary the access arrangements applicable thereto.
(2) An application under this section shall–
(a) be in an approved form; and
(b) be made in an approved manner; and
(c) be accompanied by particulars of the proposed variation; and
(d) specify the reason for the proposed variation; and
(e) in the case of an application to convert a project pipeline to a strategic pipeline, be accompanied by–
(i) draft access arrangements which the applicant proposes should be the access arrangements applying to that pipeline; and
(ii) pro forma accounts for the pipeline and the other petroleum processing facilities referred to in Subsection 75(7), and an explanation of how the financial records for the pipeline will be maintained separately from other operations of the pipeline licensee; and
(f) in the case of an application to vary the access arrangements applicable to a strategic pipeline, be accompanied by draft modified access arrangements.
(3) The Minister may require the pipeline licensee to furnish such further information in connection with the application as the Minister considers necessary.
(4) In the case of an application to convert a project pipeline to a strategic pipeline or an application to vary the access arrangements applying to a strategic pipeline–
(a) the applicant shall, prior to submitting its application, consult with existing and potential third party users of the pipeline, and shall furnish to the Minister a report on the possible third party users and their possible requirements in using the pipeline and their views on the contents of the access arrangements to apply to the pipeline; and
(b) upon receipt of the application the Minister shall cause a notice to be published in the National Gazette advising of the application and particulars of the pipeline, and inviting existing and potential third party users of the pipeline to make submissions to the Minister within the period specified in the notice as to their potential requirements in using the pipeline and the contents of the access arrangements to apply to the pipeline; and
(c) the draft access arrangements submitted by the applicant shall be a public document, and any person may inspect that document or those documents at the office of the Director; and
(d) the Minister shall notify the applicant of any submissions received in accordance with Subsection (4)(b) and provide the applicant with a copy of all such submissions if requested.
(5) In the case of any application under this section other than an application to convert a project pipeline to a strategic pipeline or an application to vary the access arrangements applying to a strategic pipeline, the Minister may, after considering a report from the Board and any matter submitted to him under this section–
(a) vary the pipeline licence in accordance with the application or otherwise as he may agree with the pipeline licensee; or
(b) reject the application.
(6) In the case of an application to convert a project pipeline to a strategic pipeline or an application to vary the access arrangements applying to a strategic pipeline, the Minister may, after considering a report from the Board and any matter submitted to him under this section–
(a) serve on the pipeline licensee an instrument–
(i) advising the pipeline licensee that the Minister is prepared to vary the pipeline licence to convert the pipeline to a strategic pipeline or vary the access arrangements, as the case may be; and
(ii) specifying the terms of the access arrangements or varied access arrangements, complying with Section 75, to be approved by the Minister and apply to the pipeline in accordance with Section 75; or
(b) reject the application.
(7) A pipeline licensee who has been served with an instrument under Subsection (6)(a) may, within a period of three months after the date of service of the instrument on him, by instrument served on the Director, request the Minister to vary the pipeline licence in accordance with the instrument referred to in that subsection.
(8) Where a pipeline licensee who has been served with an instrument under Subsection (6)(a) has, within the period specified in Subsection (7), made a request under Subsection (7), the Minister shall approve the access arrangements or varied access arrangements specified in the instrument and vary the pipeline licence in accordance with the instrument.
(9) A pipeline licence shall not be varied under this section to convert the pipeline to a strategic pipeline or to vary the access arrangements applying to a strategic pipeline unless the Minister has approved access arrangements or varied access arrangements complying with Section 75 and the applicant has accepted those access arrangements or varied access arrangements in accordance with Subsection (7).
(10) Where the Minister varies a pipeline licence under this section, he shall cause to be published in the National Gazette a notice of the variation.
(11) A project pipeline which is converted to a strategic pipeline under this section shall be a strategic pipeline with effect from the date the variation of the licence for that purpose takes effect, and thereafter those approved access arrangements shall apply to that pipeline in accordance with Section 75.
(12) Where the access arrangements applying to a strategic pipeline are varied under this section, the varied access arrangements shall apply to that pipeline in accordance with Section 75 with effect from the date the variation of the licence for that purpose takes effect.
(13) Notwithstanding Subsections (11) and (12), the establishment or variation under this section of the access arrangements applying to a strategic pipeline shall not affect the validity of agreements previously entered into by the pipeline licensee for transportation of petroleum.
82. VARIATION OF PIPELINE LICENCE BY MINISTER.
(a) for the protection of health and safety; or
(b) to avoid obstruction of, or interference with, the rights of other persons,
by instrument served on a pipeline licensee, direct the licensee to make such changes in the design, construction and route or position of the pipeline (including pumping stations, tank stations or valve stations) to which the pipeline licence relates as are specified in the instrument, within the period specified in the instrument.
(2) A person to whom a direction is given under Subsection (1) who fails or refuses to comply with the direction is guilty of an offence.
Penalty: A fine not exceeding K25,000.00.
Default penalty: A fine not exceeding K25,000.00.
(3) Where the Minister gives a direction under Subsection (1) and the person to whom the direction is given complies with the direction, the Minister may grant to that person such sum as he considers reasonable in the circumstances.
(4) Where the Minister gives a direction under Subsection (1), any pipeline licence affected by the direction shall be deemed to be varied to the extent reasonably necessary to enable the direction to be complied with.
(5) If, in the opinion of the Minister, acting in accordance with the advice of the Board–
(a) it is desirable that a project pipeline be used by third parties for transportation of their petroleum or petroleum products, and that such third parties will have petroleum or petroleum products to be transported in that pipeline, he may by instrument served on the pipeline licensee direct that a project pipeline be converted to a strategic pipeline; or
(b) it is desirable that the terms of access arrangements applying to a strategic pipeline be varied, he may by instrument served on the pipeline licensee direct that the access arrangements applying to that strategic pipeline be varied.
(6) If the Minister gives a direction under Subsection (5), he shall publish in the National Gazette notice advising of that direction and particulars of the pipeline, and inviting existing and potential third party users of the pipeline to make submissions to the Minister as to their potential requirements in using the pipeline and the contents of the access arrangements to apply to the pipeline.
(7) Within three months of receipt of a direction under Subsection (5), a pipeline licensee shall lodge with the Minister–
(a) draft access arrangements complying with Section 75, which the applicant proposes should be the access arrangements or varied access arrangements applying to that pipeline; and
(b) in the case of a direction to convert from a project pipeline to a strategic pipeline, pro forma accounts for the pipeline and the other petroleum processing facilities referred to in Subsection 75(7), and an explanation of how the financial records for the pipeline will be maintained separately from other operations of the pipeline licensee.
(8) Prior to submitting draft access arrangements, the applicant shall make all reasonable efforts to consult with existing and potential third party users of the pipeline, and shall furnish to the Minister a report on the possible third party users and their possible requirements in using the pipeline and their views on the contents of the access arrangements to apply to the pipeline.
(9) A notice referred to in Subsection (6) shall invite existing and potential third party users of the pipeline to make submissions to the Minister within the period stipulated in the notice as to their potential requirements in using the pipeline and the contents of the access arrangements to apply to the pipeline.
(10) The draft access arrangements submitted by the pipeline licensee shall be a public document, and any person may inspect that document or those documents at the office of the Director.
(11) The Minister shall notify the applicant of any submissions received in response to invitations made in accordance with Subsection (6) and provide the applicant with a copy of all such submissions if requested.
(12) If the draft access arrangements or varied access arrangements proposed by the pipeline licensee, as they may be amended by agreement between the Minister and the pipeline licensee, are acceptable to the Minister, the Minister shall approve those access arrangements, and vary the pipeline licence to convert the project pipeline to be a strategic pipeline or adopt the new access arrangements, as the case may be.
(13) If the draft access arrangements or varied access arrangements proposed by the pipeline licensee are not acceptable to the Minister and the pipeline licensee and the Minister are not able to reach agreement on amendments to the draft, the Minister may refer the question of the terms of the access arrangements or varied access arrangements to apply to the pipeline for expert determination in accordance with Subsection (14).
(14) If the Minister makes a reference under Subsection (13), then the terms of the access arrangements or varied access arrangements shall be determined by an expert appointed by the Minister for that purpose and paid for by the State, who shall–
(a) be independent of the State and the pipeline licensee; and
(b) be qualified by experience in dealing with open access arrangements for pipelines; and
(c) prior to making his decision, consult with the Minister and the pipeline licensee and any person who has made a submission under Subsection (6); and
(d) in making his decision have regard to the reasonable requirements of those persons making such submissions; and
(e) determine terms of access arrangements which comply with Section 75.
(15) When the access arrangements are determined by expert determination under Subsection (14), the Minister may–
(a) approve the access arrangements or varied access arrangements so determined; and
(b) vary the pipeline licence to convert the project pipeline to be a strategic pipeline or adopt the varied access arrangements, as the case may be.
(16) Where the Minister varies a pipeline licence under this section, he shall cause to be published in the National Gazette a notice of the variation.
(17) A project pipeline which is converted to a strategic pipeline under this section shall be a strategic pipeline with effect from the date the variation of the licence for that purpose takes effect, and thereafter those approved access arrangements shall apply to that pipeline in accordance with Section 75.
(18) Where the access arrangements applying to a strategic pipeline are varied under this section, the varied access arrangements shall apply to that pipeline in accordance with Section 75 with effect from the date the variation of the licence for that purpose takes effect.
(19) Notwithstanding Subsections (17) and (18), the establishment or variation under this section of the access arrangements applying to a strategic pipeline shall not affect the validity of agreements previously entered into by the pipeline licensee for transportation of petroleum.
83. COMMON CARRIER.
(2) Where a pipeline licensee is given a direction under this section, that pipeline licensee shall thereafter be a common carrier in respect of that pipeline, and the provisions of this section and of any regulations prescribed under Subsection (3) shall apply to the pipeline operations conducted under that pipeline licence.
(3) Subject to Subsection (4), regulations may prescribe the manner of the operation of a pipeline in respect of which a direction has been given under this section.
(4) Any regulation made under Subsection (3) shall give priority to–
(a) bona fide prior contractual commitments of the pipeline licensee with unrelated parties; and
(b) the bona fide requirements of the pipeline licensee to transport petroleum or petroleum products produced from a petroleum project in respect of which the pipeline licensee holds a petroleum development licence.
(5) A pipeline licensee which has been given a direction under this section in respect of a pipeline may, notwithstanding that direction, make an application under Subsection 81(1)(g) in respect of that pipeline.
(6) If, on an application under Subsection 81(1)(g) in relation to a pipeline by a pipeline licensee which has been given a direction under this section in respect of that pipeline, the Minister grants a variation to that pipeline licence to convert the pipeline to a strategic pipeline, the provisions of this section and the regulations in relation to common carriage shall cease to apply to that pipeline.
84. CEASING TO OPERATE PIPELINE.
Penalty: A fine not exceeding K50,000.00.
(2) It is not an offence against Subsection (1) if the failure to operate the pipeline–
(a) was in the ordinary course of the operation of the pipeline; or
(b) was for the purpose of repairing or maintaining the pipeline; or
(c) was in an emergency in which there was a likelihood of loss or injury; or
(d) was as a result of an industrial strike or picket.
Division 10.
Petroleum Processing Facility Licences.
85. PETROLEUM PROCESSING FACILITY LICENCE REQUIRED.
(2) The provisions of Subsection (1) shall not apply to the holder of a petroleum development licence in respect of a petroleum processing facility which is part of the proposals for development approved for that petroleum development licence by the Minister under Section 57(2) as varied from time to time, but the licensee thereof shall comply with all regulations prescribed for securing, regulating, controlling or restricting petroleum processing facilities and the facilities shall be subject to inspection under Section 152.
(3) The provisions of Subsection (1) shall not apply in relation to–
(a) storage and transportation facilities for domestic utilisation that are designated by regulation to be exempt; or
(b) pipelines in respect of which a pipeline licence is in force,
but the operator thereof shall comply with all regulations prescribed for securing, regulating, controlling or restricting petroleum processing facilities and the facilities shall be subject to inspection under Section 152.
86. APPLICATION FOR PETROLEUM PROCESSING FACILITY LICENCE.
(2) The Minister may, by notice in the National Gazette–
(a) invite application for the grant of a petroleum processing facility licence; and
(b) specify the period during which such an application should be made.
87. FORM OF APPLICATION FOR PETROLEUM PROCESSING FACILITY LICENCE.
(a) be made in an approved form; and
(b) be made in an approved manner; and
(c) be accompanied by particulars of–
(i) the names and address of the persons who will construct, operate and own the petroleum processing facility; and
(ii) the proposed site for the petroleum processing facility and arrangements for the legal occupation of the site; and
(iii) the design of the petroleum processing facility; and
(iv) the technical qualifications of the applicant and his contractors; and
(v) the financial capacity of the applicant to construct and operate the petroleum processing facility; and
(vi) environmental monitoring systems, waste disposal procedures and the results of environmental studies; and
(vii) the intended date for commencement of construction and estimated dates for commissioning and full operation; and
(viii) the intended output of petroleum or petroleum products; and
(d) be accompanied by payment of the application fee prescribed by Section 157.
(2) Where an application is received under Subsection (1)–
(a) notice of the application shall be published in the National Gazette; and
(b) any person who claims to be affected by the application may file notice of his objection to that application with the Director within one month after the date of publication of the notice of application and all objections shall be considered by the Board before it reports to the Minister on the application.
(3) An application for a petroleum processing facility licence in respect of a strategic petroleum processing facility shall, in addition to the matters set out in Subsection (1), be accompanied by draft access arrangements which the applicant proposes should be access arrangements applying to that strategic petroleum processing facility.
(4) Prior to submitting an application for a petroleum processing facility licence in respect of a strategic petroleum processing facility, the applicant shall make all reasonable efforts to consult with existing and potential third party users of the petroleum processing facility, and shall furnish to the Minister a report on the possible third party users and their possible requirements in using the petroleum processing facility and their views on the contents of the access arrangements to apply to the petroleum processing facility.
(5) Where an application for a petroleum processing facility licence relates to a strategic petroleum processing facility, the notice referred to in Subsection (2) shall invite potential third party users of the petroleum processing facility to make submissions to the Minister as to their potential requirements in using the petroleum processing facility and the contents of the access arrangements to apply to the petroleum processing facility.
(6) The draft access arrangements submitted by the applicant shall be a public document, and any person may inspect that document or those documents at the office of the Director.
(7) The Minister shall notify the applicant of any submissions received in accordance with Subsection (5), and provide the applicant with a copy of all such submissions if requested.
88. GRANT OR REFUSAL OF PETROLEUM PROCESSING FACILITY LICENCE.
(a) by instrument served on the applicant, inform the applicant–
(i) that he is prepared to grant to the applicant a petroleum processing facility licence in respect of the site and for construction of the petroleum processing facility specified in the application; and
(ii) that the applicant will be required to lodge a security for compliance with the conditions to which the petroleum processing facility licence, if granted, will be subject and the provisions of this Act, and to pay the annual fee; or
(b) refuse to grant a petroleum processing facility licence to the applicant.
(2) An instrument under Subsection (1)(a) shall contain–
(a) the conditions subject to which the petroleum processing facility licence is to be granted; and
(b) a statement to the effect that the application will lapse if the applicant does not make a request under Subsection (3) in respect of the grant of the petroleum processing facility licence and lodge with the Director the security specified in the instrument and the first annual fee as prescribed by Section 157.
(3) An applicant who has been served with an instrument under Subsection (1) may, within a period of one month after the date of service of the instrument, or within such further period or periods as the Minister may allow–
(a) by instrument served on the Minister request the Minister to grant him the petroleum processing facility licence; and
(b) lodge with the Director the security referred to in Subsection (1)(a) and the first annual fee referred to in that subsection.
(4) Where an applicant has complied with the requirements of Subsection (3), the Minister shall grant a petroleum processing facility licence for the site and the petroleum processing facility specified in the instrument, subject to the conditions specified in the instrument or such other conditions as are agreed by the Minister and the applicant, but in any other case the application lapses.
(5) Where an application has been made under Section 86 in respect of a strategic petroleum processing facility, the Minister may, after considering a report of the Board–
(a) by instrument served on the applicant, inform the applicant–
(i) that he is prepared to grant to the applicant a petroleum processing facility licence in respect of the site and for construction and operation of the petroleum processing facility specified in the application; and
(ii) that the applicant will be required to lodge a security for compliance with the conditions to which the petroleum processing facility licence, if granted, will be subject and the provisions of this Act, and to pay the annual fee; or
(b) refuse to grant a petroleum processing facility licence to the applicant.
(6) The Minister shall not refuse under Subsections (1) or (5) to grant a petroleum processing facility licence unless–
(a) he has, by the instrument referred to in those subsections served on the applicant, given not less than one month’s notice of his intention to do so; and
(b) he has, in that instrument–
(i) given particulars of the reason for his intention; and
(ii) specified a date on or before which the applicant may, by instrument served on the Minister, submit any matters that the applicant requires the Minister to consider, including new proposals generally or in respect of some particular matter; and
(c) he has given to the applicant, and to any persons whom the applicant thinks fit to consult, a full opportunity to consult with the Minister concerning the Minister’s intention to refuse to grant a petroleum processing facility licence; and
(d) he has taken into account, after considering a report from the Board, any matters raised in the course of such consultations by the applicant or by any other person referred to in Paragraph (c).
(7) An instrument under Subsection (5)(a) shall contain–
(a) the conditions subject to which the petroleum processing facility licence is to be granted; and
(b) the terms of the access arrangements, complying with Section 89, to be approved by the Minister and apply to the petroleum processing facility in accordance with Section 89; and
(c) a statement to the effect that the application will lapse if the applicant does not make a request under Subsection (8) in respect of the grant of the petroleum processing facility licence and lodge with the Director the security specified in the instrument and the first annual fee as prescribed by Section 157.
(8) An applicant who has been served with an instrument under Subsection (5)(a) may, within a period of one month after the date of service of the instrument, or within such further period or periods as the Minister may allow–
(