Petroleum (Exploration and
Production)
Act, 2016
Act 919
ARRANGEMENT OF SECTIONS
Section
General Provisions
1.Scope
of the Act-
2.Object
of the Act
3.Title
to petroleum
4.Management
of petroleum resources
5.Conduct
of petroleum activities
Area Management
6.Reference
map
7.Opening
of area
8.Closure
and redefinition of area
Reconnaissance Licence
Reconnaissance
licence
Petroleum Agreement
10.Petroleum
agreement
11.Petroleum
activities by the Corporation
12.Contract
area
13.Operator
14.Duration
15.Change
of ownership
16.Assignment
17.Sub-contracting
18.Pre-emption
19.Transfer
of assets to the Corporation
20.Review
of terms and conditions
Exploration
21.Exploration
period and extension
22.Relinquishment
of contract area
23.Minimum
work obligation
24.Exploration
drilling,
25.Notification
of petroleum discovery and
appraisal
Development and Production
26.Prudent
exploitation
27.Plan
of development and operation
28.Restrictions
on approval of plan of
development and operation
29.Postponement
of development
30.Commencement
of petroleum production
31.Production
programme and permits
32.Utilisation
of associated natural gas
33.Restrictions
on flaring
34.Co-ordination
of petroleum activities and
unitisation
35.Cross-border
cooperation and unitisation
36.Third
party use of production
facilities
37.Measurement
of petroleum obtained
Transportation, Treatment and
Storage
38.Licence
to install and operate
facilities for transportation,
treatment
and storage of petroleum
39.Application
to install and operate
facilities
40.Conditions
for granting of a licence to
install and operate facilities
41.Landing
of petroleum
42.Third
party use of transportation,
treatment and storage facilities
Cessation, Decommissioning and
Removal of Facilities
43.Decommissioning
plan
44.Decision
on the decommissioning plan
45.Decommissioning
fund
46.Plugging
and abandonment of well
47.Restoration
of affected areas
48.Liability
for decommissioning
49.Compliance
General Requirements for
Petroleum Activities
50.Petroleum
operating standards
51.Supervision
and inspection
52.Ownership
of petroleum data
53.Samples,
data and information
54.Reporting
55.Information
concerning petroleum activities
56.Petroleum
register
57.Mortgaging
of participating interest
58.Security
for fulfilment of obligations
59.Liabilities
60.Employment
and training of Ghanaian
citizens
61.Use
of Ghanaian goods and services
62.Technology
transfer
63.Local
content plan
64.Establishment
of the Local Content Fund
65.Object
of the Fund
66.Sources
of money for the Fund
67.Management
of the Fund
68.Accounts
and audit
69.Annual
report and other reports
70.Incorporation
of local company
71.Domestic
supply requirement
72.Interference
with lawful activities,
compensation and access to land
Health and Safety, Security and
Environment
73.Safety
requirements and standards
74.Safety
precautions
75.Emergency
preparedness
76.Emergency
preparedness against deliberate
attacks
77 . Safety zones
77.Suspension
of petroleum activities
78.Measures
to ensure safety
79.Qualifications
The Environment and Liability
for Pollution Damage
81.Environmental
principles and protection
82.Impact
assessment
83.Liability
for pollution damage
84.Compensation
for pollution damage
Fiscal Provisions
85.Payment
of royalties
86.Annual
fee in respect of acreage
87.Tax
88.Bonus
payments
89.Additional
oil entitlement
Miscellaneous Provisions
90.Natura!
resources other than petroleum
resources
91.Transactions
between contractor and
affiliates
92.Insurance
93.Offences
and penalties
94.Authority
to issue Regulations, guidelines
and stipulate conditions
95.Interpretation
96.Transitional
provisions
97.Repeal
and savings
Act 919
REPUBLIC OF GHANA
THE NINE HUNDRED AND NINETEENTH
ACT
OF THE PARLIAMENT OF THE
REPUBLIC OF GHANA
ENTITLED
PETROLEUM (EXPLORATION AND
PRODUCTION) ACT, 2016
AN ACT to regulate petroleum
activities and to provide for
related matters.
DATE OF ASSENT:
19th August, 2016.
PASSED by Parliament and
assented to by the President:
General Provisions
Scope of the Act
1. This Act applies to petroleum
activities within the
jurisdiction of the Republic of
Ghana, including activities in,
under and upon its territory all
and, inland waters, territorial
sea, exclusive economic zone and
its continental shelf.
Object of the Act
2. The object of the Act is to
provide for and ensure "safe,
secure, sustainable and
efficient petroleum activities
in order to achieve optimal
long-term petroleum resource
exploitation and utilisation for
the benefit and welfare of the
people of Ghana.
Title to petroleum
3.
Petroleum existing in its
natural state in, under or upon
any land in Ghana, rivers,
streams, water courses
throughout Ghana, the exclusive
economic zone and any area
covered by the territorial sea
or continental shelf, is the
property of the Republic of
Ghana and is vested in the
President on behalf of and in
trust for the people of Ghana.
Management of petroleum
resources
4.
The management of petroleum
resources by the Republic of
Ghana shall be conducted in
accordance with the principles
of good governance, including
transparency and accountability
and the object of this Act.
Conduct of petroleum activities
5.
Subject to section 11, petroleum
activities shall be conducted
only in an open area under a
licence or petroleum agreement
and in accordance with
applicable enactments.
Area Management
Reference map
6.
The Minister, shall in
consultation with the
Commission, prepare a reference
map showing areas of possible
accumulation of petroleum within
the jurisdiction of Ghana and
those areas shall in the map be
divided into numbered areas,
each of which shall be described
as a block.
Opening of an area
7. (1) The decision to open an
area for petroleum activities
shall be made by the Minister.
(2) The Minister shall, in
collaboration with the
Commission and other agencies,
undertake an evaluation of the
various interests in the
relevant area before the area is
opened for petroleum activities.
(3) The Minister shall prepare a
report on the evaluation which
shall include a strategic
assessment of
(a)
the impact of the petroleum
activities on local communities,
(b)
the impact of petroleum
activities on the environment,
trade, agriculture, fisheries,
shipping, maritime and other
industries and risk of
pollution, and
(c)
the potential economic and
social impact of the petroleum
activities.
(4) The Minister shall publish
the evaluation report in the
Gazette and in at least two
state-owned daily newspapers and
may publish the report in any
other medium of public
communication.
(5) The report shall specify the
area proposed to be opened for
petroleum activities, and the
nature and extent of the
petroleum activities.
(6) A person who has an interest
in an area which is the subject
of an evaluation report shall,
within sixty days after the
publication of the report,
present the views of that person
to the Minister.
(7) The Minister, having taken
due consideration of the report
and the views of an interested
party, shall determine whether
or not to open the area.
(8) The Minister shall publish
the decision in the Gazette
and in at least two
state-owned daily newspapers and
may publish the report in any
other medium of public
communication.
(9) The Minister may reserve a
block, part of a block or a
number of blocks in an open area
for the Corporation.
Closure and redefinition of area
8. (1) The Minister may
(a)
close an area; or
(b)
redefine the boundaries of an
area which has been declared
open under section 7 but which
is not covered by an existing
petroleum agreement or
authorisation.
(2) The Minister shall, before
closing an area or redefining
the boundary of an area, publish
a notice of the decision to
close the area or redefine the
boundary of the area in the
Gazette and in at least two
state- owned daily newspapers
and may publish the report in
any other medium of public
communication.
(3) A person who has an interest
in the affected area may make a
representation to the Minister
on the closure or redefinition
of the boundary within sixty
days after the publication.
(4) The Minister shall, after
taking due consideration of any
representation made under
subsection (3), determine
whether or not to close an area
or redefine the boundaries of
the area.
(5) The Minister shall after the
expiration of the sixty day
period, publish the closure or
redefinition of the boundaries
of the area in the Gazette
and in at least two
state-owned daily newspapers and
may publish the closure or
redefinition of the boundaries
in any other medium of public
communication.
(6) The closure or redefinition
of the boundaries of an open
area shall not affect another
area covered by a petroleum
agreement or authorisation
existing at the time of the
decision.
Reconnaissance Licence
Reconnaissance licence
9. (1) The Minister may, in
consultation with the
Commission, grant to a person, a
petroleum reconnaissance licence
in respect of a defined area.
(2) A reconnaissance licence
grants to the licensed person a
non- exclusive right to
undertake
(a)
data collection including
seismic surveying and shallow
drilling, and
(b)
processing and interpretation or
evaluation of petroleum data in
the area specified in the
licence.
(3) The Minister may in a
special case grant to a person
an exclusive right to undertake
reconnaissance activities in a
defined area not covered by an
existing reconnaissance licence,
but the grant of that right does
not affect any proprietary
rights of the Republic to data
or preclude the rights of the
Commission or the Corporation to
undertake reconnaissance or
other petroleum activities
within that area.
(4) The Republic may enter into
a petroleum agreement with a
per- son who has the requisite
technical competence and
financial capacity to fulfil the
obligations of the
reconnaissance activities and
other requirements as
prescribed.
(5) A reconnaissance licence
shall be for a period of not
more than three years but the
Minister may, where necessary,
extend the licence for a period
not exceeding two years.
(6) A person shall not commence
a reconnaissance activity in
relation to petroleum unless
that person has complied with
(a)
the relevant statutory
requirements on environmental
protection prescribed in the
Environmental Protection Agency
Act, 1994 (Act 490); and
(b)
any other applicable enactments.
(7) Subject to subsection (8), a
reconnaissance licence shall not
grant to a person a right to
acquire data in an area covered
by a petroleum agreement or an
authorisation.
(8) The Minister may, in
consultation with the
contractor, grant to a person
other than the contractor a
reconnaissance licence for the
acquisition of data in an area
covered by a petroleum agreement
on condition that the
reconnaissance activities of
that person do not unreasonably
interfere with the activities of
the contractor.
(9) The Minister shall not be
held liable by a third party for
fees or for other losses that
arise as a result of the
reconnaissance licence granted
to that third party under
subsection (8).
(10) A petroleum agreement may
be entered into with a third
party in respect of an open area
covered by a reconnaissance
licence.
(II) Unless the Minister
otherwise determines, the right
granted under a reconnaissance
licence to acquire new data in
the open area referred to in
subsection (10) shall terminate
from the effective date of a
petroleum agreement and an
obligation to refund fees or
liability for other losses shall
not arise as a result of the
termination.
Petroleum Agreement
Petroleum agreement
10.
(1) A body corporate shall not,
unless otherwise provided in
this Act, engage in the
exploration, development and
production of petroleum except
in accordance with the terms of
a petroleum agreement entered
into between that body
corporate, the Republic of Ghana
and the Corporation.
(2) A contractor shall, subject
to the provisions of this Act,
carry out petroleum activities
in the contract area as provided
in the petroleum agreement.
(3) A petroleum agreement shall
only be entered into after an
open, transparent and
competitive public tender
process.
(4) Despite subsection (3), the
Minister may on stated reasons
decide not to enter into a
petroleum agreement after the
tender process as prescribed,
(5) Where all or part of the
area offered for tender in a
public tender process has not
become the subject of a
petroleum agreement, but the
Minister determines that it is
in the public interest for that
area to be subjected to a
petroleum agreement, the
Minister may initiate direct
negotiations with a qualified
body corporate for a petroleum
agreement.
(6) The Minister shall publish
an invitation to tender or an
invitation for direct
negotiations in the Gazette
and in at least two
state-owned daily newspapers and
may publish the invitation in
any other medium of public
communication.
(7) A body corporate who wishes
to submit a bid or participate
in negotiations shall submit an
expression of interest to the
Minister, as prescribed.
(8) Where the Minister receives
more than one expression of
interest, a tender process in
accordance with subsection (3)
shall be undertaken.
(9) Despite subsection (3), the
Minister may, in consultation
with the Commission, determine
that a petroleum agreement may
be entered into by direct
negotiations without public
tender, where direct
negotiations represent the most
efficient manner to achieve
optimal exploration, development
and production of petroleum
resources in a
defined area.
(10) The Republic may enter into
a petroleum agreement with a
body corporate that has the
requisite technical competence
and financial capacity to fulfil
the obligations of the petroleum
agreement and other requirements
as prescribed.
(11) The Minister may require a
consortium as a condition for
entering into a petroleum
agreement.
(12) The Minister shall
represent the Republic of Ghana
in the negotiation of the terms
of a petroleum agreement and
shall enter into a petroleum
agreement on behalf of the
Republic.
(13) A petroleum agreement
entered into by the Minister
shall not be effective if it is
not ratified by Parliament in
accordance with article 268 of
the Constitution.
(14) A petroleum agreement shall
contain a term that the
Corporation shall
(a)
hold an initial participating
carried interest of at least
fifteen per cent for exploration
and development, and
(b)
have the option to acquire an
additional participating
interest as determined in the
petroleum agreement which
(i) may be exercised within a
specified period of time
following the declaration of
commercial discovery, and
(ii) shall be a paying interest
in respect of costs incurred in
the conduct of petroleum
activities other than
exploration costs.
(15) Any borrowing exceeding the
cedi equivalent of thirty
million United States Dollars
for the purpose of exploration,
development and production shall
be approved by Parliament and
shall be in consonance with the
Petroleum Revenue Management
Act, 2011 (Act 815).
Petroleum activities by the
Corporation
11.
(1) Subject to the authorisation
of the Minister and any terms
stipulated by the Minister, the
Corporation may undertake
petroleum activities in an area
opened under section 7 but which
is not covered by a petroleum
agreement. ..
(2) An authorisation by the
Minister is not effective unless
it is ratified by Parliament in
accordance with article 268 of
the Constitution.
(3) Where the Corporation
undertakes petroleum activities,
the operations of the
Corporation shall
(a)
be carried out in accordance
with approvals or permits
granted under this Act and
applicable enactments, and
(b)
be in accordance with a
long-term exploration and
production programme and annual
programme drawn up by the
Corporation and approved by the
Minister, in consultation with
the Commission, in respect of
each area.
(4) The Corporation may employ
sub-contractors to perform the
functions of the Corporation but
these sub-contractors are not
entitled to any share of
petroleum produced as a result
of their operations.
(5) Where the Corporation
conducts petroleum activities
not in association with a
contractor, a contractor may
subsequently be included as a
party under a petroleum
agreement in accordance with
section 10.
Contract area
12.
The area subject to a petroleum
agreement shall be specified in
the petroleum agreement and may
cover one or more blocks or
parts of one or more blocks.
Operator
13.
(1) The Minister shall approve
the operator before the
execution of a petroleum
agreement under section 10.
(2) The Minister shall appoint
an operator where the parties
cannot agree on the choice of an
operator.
(3) An operator shall be a
contractor, the Corporation, a
body corporate owned by the
Corporation or a body corporate
owned by the contractor and the
Corporation.
(4) The Minister may approve a
change of an operator upon the
request of a contractor or the
Corporation.
(5) The Minister shall, in
consultation with the Commission
and the Corporation, change an
operator in circumstances where
that operator ceases to meet
material requirements of this
Act, other applicable enactments
and a petroleum agreement.
Duration
. 14. (1) A petroleum
agreement shall, subject to
subsection (2), be for a period
of not more than twenty-five
years.
(2) Where production from a
field is projected to extend
beyond the original term of the
petroleum agreement, the
Minister may
(a)
approve an extension of the
petroleum agreement on the terms
agreed by the parties; or
(b)
execute a new petroleum
agreement by direct negotiations
in accordance with section 10,
to ensure optimal production
from the field.
(3) The extension of a petroleum
agreement or the execution of a
new petroleum agreement is
subject to ratification by
Parliament.
Change of ownership
15.
A contractor or sub-contractor
shall not transfer a share of
that contractor's or
sub-contractor's incorporated
company in the Republic to a
third party or affiliate without
the written approval of
(a)
the Minister, in the case of a
contractor, or
(b)
the Commission, in the case of a
sub-contractor, if the effect of
the transfer would be to
(c)
give the third party or
affiliate control of the
company, or
(d)
enable the third party or
affiliate to take over the
interest of a shareholder who
owns five per cent or more of
the shares of the company.
Assignment
16.
A contractor or a licensee shall
not without the written approval
of the Minister, directly or
indirectly assign the interest
of the contractor under a
petroleum agreement, whether in
whole or in part, to a third
party or an affiliate.
Sub-contracting
17.
(1) A contractor or
sub-contractor shall not enter
into a petroleum sub-contract
without the written approval of
the Commission.
(2) The Commission shall approve
the threshold for the value of
petroleum sub-contracts as
prescribed.
(3) A sub-contractor shall
register with the Commission as
prescribed.
(4) A contractor shall not award
a petroleum sub-contract to a
company that is not registered
with the Commission.
(5) A contractor shall not enter
into an agreement with an
affiliate for the 11 ease of a
petroleum facility to be used
for petroleum activities without
the written approval of the
Commission.
(6) A person shall not without
the written approval of the
Commission directly or
indirectly assign, whether in
whole or in part, a right or
obligation under a sub-contract
to a third person or an
affiliate.
Pre-emption
18.
(1) Where a contractor enters
into an agreement to dispose of
all or part of the interest of
that contractor directly or
indirectly under a petroleum
agreement, the Corporation shall
have a pre-emption right to
acquire the interest on the same
terms as agreed with the
potential buyer.
(2) Where the consideration
agreed is not in monetary terms,
the Corporation may pay the
corresponding monetary value of
that consideration.
(3) Where a contractor has
entered into an agreement to
dispose of all or part of the
interest of that contractor
under a petroleum agreement, the
contractor shall notify the
Minister, the Commission and the
Corporation immediately of the
consideration and other terms
agreed,
(4) The Corporation shall notify
the contractor of the election
of the Corporation to exercise
the pre-emption right within
ninety days of the receipt of
the notification.
Transfer of assets to the
Corporation
19.
(1) Ownership of physical assets
purchased, installed or
constructed by a contractor for
petroleum activities shall be
transferred to the Corporation
at the option of the Corporation
either when the full cost has
been recovered in accordance
with the terms of the petroleum
agreement or when the petroleum
agreement terminates.
(2) The contractor is entitled
to further use of the assets for
purposes of operations under the
petroleum agreement and remains
liable for maintenance,
insurance and other costs
associated with the use of the
assets.
(3) The contractor is in any of
the events specified under
subsection (1) responsible for
the decommissioning of the
assets.
(4) A physical asset that is
used by a contractor in a
petroleum activity as a capital
or financial lease shall be
treated as a purchased asset.
(5) Where at least fifty percent
of the cost of a physical asset
has been recovered in accordance
with the terms of an existing
petroleum agreement, the
Corporation may have the title
to the asset transferred to the
Corporation by the contractor on
the payment by the Corporation
of the unrecovered portion of
the cost of the asset.
(6) A contractor is not required
under this section to transfer
to the Corporation, equipment or
any other assets rented or
leased by the contractor for use
in petroleum activities and
which are of the type
customarily leased for use in
accordance with petroleum
industry practice.
(7) A lien, charge or an
encumbrance on an asset shall
lapse upon the transfer of that
asset under this section,
however, the rights of use
established with the prior
approval of the Minister shall
remain in force.
Review of terms and conditions
20.
(1) The terms of a petroleum
agreement may be reviewed by the
parties to the agreement where
there is a material change in
the circumstances that prevailed
at
(a)
the time the agreement was
executed, or
(b)
the last review of the
agreement.
(2) A petroleum agreement that
is reviewed under subsection (1)
is subject to ratification by
Parliament in accordance with
article 268 of the Constitution,
if the review results in
material change.
Exploration
Exploration period and extension
21.
(1) A petroleum agreement shall
contain as a term of the
agreement, a provision that
specifies that the exploration
period is, subject to subsection
(5), not more than seven years
from the effective date of the
agreement.
(2) The exploration period shall
consist of working periods,
comprising an initial
exploration period and up to
three extension periods as
provided for in the petroleum
agreement, within the total
exploration period.
(3) On the fulfilment of the
work and expenditure obligations
stipulated in a petroleum
agreement for a relevant working
period under subsection (2), the
contractor may enter into the
subsequent working period and
shall exercise that option by
written notification to the Com-
mission before the expiration of
the relevant working period.
(4) The Commission may extend
each working period on
application by the contractor
and the extension shall be
granted on the condition that
the contractor has carried out
substantial parts of the work
programme stipulated in the
petroleum agreement in a prudent
manner and to the satisfaction
of the Commission.
(5) The Minister in consultation
with the Commission may extend
the exploration period beyond
seven years from the effective
date of the petroleum agreement,
(a)
where a discovery of petroleum
is made in the last year of the
exploration period, and an
extension is necessary to enable
a determination to be made of
whether the discovery is a
commercial discovery; or
(b)
in exceptional situations as
prescribed.
(6) An extension in subsection 5
(a) shall
(a)
only apply to the reduced area
encompassing the geological
structure in which the discovery
is located; and
(b)
be limited to the time period
necessary for the determination
of whether the discovery is a
commercial discovery.
(7) Where a contractor before
the expiration of the
exploration period has not
submitted to the Minister, a
declaration that the petroleum
discovered in a contract area is
a commercial discovery, the
petroleum agreement shall
terminate.
Relinquishment of contract area
22. (1) A contractor may submit
to the Commission a proposal to
relinquish a contract area or
part of a contract area.
(2) The Commission may approve
the proposal in accordance with
prescribed conditions.
Exploration drilling
24. (1) A contractor shall
submit an application to the
Commission for a permit to
undertake exploration drilling.
(2) The contractor shall
commence drilling operations
after the contractor has
received a drilling permit from
the Commission.
(3) The contractor shall
commence the exploration
drilling after complying with
the relevant statutory
environmental requirements as
prescribed in the Environmental
Protection Agency Act, 1994 (Act
490) and other applicable
enactments.
(4) Each well or field shall be
identified by a unique
designation assigned by the
Commission.
(5) The contractor shall not
change the designation, status
or classification of a well or
field without the written
approval of the Commission.
(6) This section applies to the
Corporation where it undertakes
petroleum activities under
section 11 (1).
Notification of petroleum
discovery and appraisal
25. (1) A contractor shall
furnish information requested by
the Minister or the Commission
and submit periodic reports on
any exploration carried out
under a petroleum agreement as
prescribed.
(2) Where exploration activities
result in a petroleum discovery,
the contractor shall
(a)
within forty-eight hours after
the discovery submit written
notification of the discovery to
the Minister before notification
to a third party; and
(b)
provide the full particulars of
the discovery in writing to the
Minister and the Commission as
soon as practicable and in any
event within one hundred days
after the discovery, stating
whether the discovery merits
appraisal or not.
(3) The date of the written
notification to the Minister
shall be the discovery date.
(4) Where the contractor has
stated in the particulars
required by subsection (2)
(b) that the discovery does
not merit appraisal, the
contractor shall with effect
from the date of notification
relinquish the contract area
encompassing the geological
structure in which the discovery
is located.
(5) A contract area relinquished
under subsection (4) shall not
reduce the contract area to be
retained in accordance with
section 22.
(6) The delineation of the
contract area to be relinquished
is subject to the approval of
the Commission.
(7) Where a contractor has
indicated in the notification
submitted to the Minister and
the Commission under subsection
(2)(b) that the discovery merits
appraisal, the contractor shall
prepare and submit to the
Commission, with a copy to the
Minister, a programme and
schedule to carry out an
adequate and effective appraisal
of the discovery.
(8) The programme and schedule
shall contain information that
will enable the contractor to
delineate the extent of the
accumulation of petroleum and to
determine whether the discovery
constitutes a commercial
discovery.
(9) The appraisal period shall
be specified in the petroleum
agreement and shall not exceed
two years from the date of
discovery.
(10) The Commission may in
special cases recommend to the
Minister to grant an extension
of the appraisal period beyond
two years and may stipulate
conditions for the extension as
prescribed.
(11) An appraisal programme is
subject to the approval of the
Commission and the Commission
may stipulate conditions for
approval as prescribed.
(12) Unless otherwise permitted
by the Commission, a contractor
shall not commence an appraisal
programme or enter into binding
obligations relating to an
appraisal programme until the
appraisal programme has been
approved by the Commission.
(13) The contractor shall
prepare and submit to the
Commission
not later than ninety days after
completion of the appraisal
programme
the results of the appraisal
programme stating whether the
discovery is
commercial or not, and the basis
for the decision.
(14) Where a contractor declares
a discovery not to be
commercial, the contract area
encompassing the geological
structure in which the discovery
is located shall be relinquished
by the contractor by
notification in writing to the
Commission within five days from
the date of the declaration that
the discovery is not commercial.
(15) The contract area to be
retained in accordance with
section 22 shall not reduce on
account of the relinquishment.
(16) The Commission shall
approve the delineation of the
contract area and relinquishment
takes effect from the date of
notification by the contractor
as approved by the Commission.
(17) This section applies to the
Corporation where it undertakes
petroleum activities under
section 11 (1) and the Minister
may determine the appraisal
period, which may exceed the
limitation set out in
subsections (9) and (10).
Development and Production
Prudent exploitation
26. (1) A contractor shall
develop and produce petroleum in
a manner that will ensure the
maximum long term recovery of
the petroleum.
(2) The contractor shall ensure
that development and production
of petroleum is conducted in
accordance with best
international practice and sound
economic principles, and in a
manner that will ensure that
waste of petroleum or loss of
reservoir energy is avoided.
(3) The contractor shall conduct
continuous evaluation of the
depletion strategy and technical
solutions to problems arising
from the exploitation and shall
take the necessary measures to
optimise the petroleum
resources.
(4) This section applies to the
Corporation where it undertakes
petroleum activities in
accordance with section 11 (1).
Plan of development and
operation
27. (1) A contractor shall,
where a discovery is declared to
be commercial, submit to the
Minister for approval a plan of
development and operation in
respect of any petroleum field
to be developed.
(2) The Minister shall set a
deadline for the submission of
the plan.
(3) The plan of development and
operation shall contain a
description of the development
programme and production
programme together with an
environmental report approved by
the appropriate institutions in
accordance with applicable
enactments.
(4) The description of the
development and production
programme shall provide detailed
information on the economic,
reserves, technical,
operational, safety, commercial,
local content and environmental
components of the proposed
development, including
(a)
a description of development
strategy and concept;
(b)
an economic assessment of the
different development methods,
estimated investments,
operational costs and selection
criteria;
(c)
a plan covering the total
development, where the
development is proposed in two
or more phases;
(d)
an assessment of the potential
for development of further
petroleum resources within the
contract area to ensure the
maximum long term recovery of
the resources;
(e)
tie-ins with other petroleum
fields where applicable;
(f)
area studies for the possibility
of co-ordination of petroleum
activities including the
development of nearby petroleum
fields;
(g)
proposed drilling and well
completion plans;
(h)
geological parameters and
reservoir engineering
methodology;
(i)
facilities for production,
storage, transportation and
delivery
of petroleum;
(j)
a development schedule;
(k)
a long-term production schedule;
(I)
a description of technical
solutions including possible
solutions for enhanced recovery;
(m)
a description of capacities of
facilities;
(n)
solutions for the efficient use
of energy, and the prevention
and minimisation of
environmentally harmful
discharges and emissions;
(0)
the disposal and use of
associated gas where applicable;
(p)
management systems, including
information on the planning,
organisation and implementation
of the development;
(q)
operation and maintenance;
(r)
a description of fiscal metering
systems;
(s)
petroleum marketing plan;
(t)
security plan;
(u)
a financing plan for the
development;
(v)
a health and safety assessment
report;
(w) an emergency
preparedness plan;
(x)
facilities for transportation,
utilisation or treatment of
petroleum;
(y)
decommissioning and disposal of
facilities;
(z)
any applications for permits and
licences required under
applicable enactments in
connection with petroleum
activities related to the plan;
(aa)
a local content plan; and
(bb)
an employment and recruitment
programme and a technology
transfer plan.
(5)
The Minister may require the
contractor to ensure that a
marginal field delineated before
and after approval of the plan
of development and operation, is
optimally developed and
produced.
(6) The plan of development and
operation shall include details
for the construction of
facilities to avoid gas venting
or flaring under normal
operating conditions.
(7) In consultation with the
Commission, the Minister may in
the national interest limit the
approval to the development and
production of individual
reservoirs or phases and the
development and production may
be subject to conditions
determined by the Minister,
including requirements relating
to additional capacities for
additional resources or third
party access.
(8) The Minister may revise the
long term production schedule if
the revision is warranted by
resource management
considerations or
significant socio-economic
considerations.
(9) Unless otherwise permitted
by the Minister, a contractor
shall not
(a)
enter into contracts relating to
the plan of development and
operation, or
(b)
commence construction works
until the plan of development
and operation has been approved
by the Minister.
(10) A plan of development and
operation becomes effective upon
the prior written approval of
the Minister.
(11) The contractor shall
promptly notify the Minister in
writing of any deviation from
the assumptions and
preconditions on which a plan
has been submitted or approved.
(12) Any deviation or alteration
to the plan of development and
operation or material alteration
to the facility requires the
written approval of the
Minister.
(13) The Minister may require a
new or amended plan of
development and operation to be
submitted before the approval of
any deviation or alteration.
(14) Where a contractor does not
submit a plan of development and
operation within the time limit
set by the Minister in
accordance with subsection (1),
and the Minister has not
extended the time limit, the
area encompassing the field to
be developed shall be
relinquished by the contractor.
(15) This section applies to the
Corporation where it undertakes
petroleum activities in
accordance with section 11 (1).
Restrictions on approval of plan
of development and operation
28. (1) The Minister shall not
approve a plan of development
and operation unless
(a)
the plan would ensure efficient,
beneficial and timely
exploitation of the petroleum
resources concerned;
(b)
the plan takes into account good
petroleum industry practice and
safety factors;
(c)
the contractor has adequate
financial resources and
technical and industrial
competence and experience to
undertake effective development
and production operations;
(d)
the descriptions and proposals
of the contractor under section
27 (4) are satisfactory to the
Minister;
(e)
the contractor is able and
willing to comply with the
conditions on which a plan of
development and operation is
approved;
(f)
the local content plan, the
proposed employment, recruitment
and training of Ghanaian
citizens and the technology
transfer plan have been approved
by the Commission; and
(g)
the contractor has adequate
insurance cover; and
(h)
the Minister has received
recommendation from the
Commission and relevant
agencies.
(2) A plan of development and
operation shall not be approved
if a contractor is in default
under a petroleum agreement.
(3) Where a plan of development
and operation is not approved,
the Minister shall by written
notice to the contractor state
the reasons for non-approval.
(4) Where a plan of development
and operation is not approved by
the Minister, the area covered
by the plan of development and
operation shall be relinquished
by the contractor.
(5) This section applies to the
Corporation where it undertakes
petroleum activities under
section 11 (1).
Postponement of development
29. (1) Where public interest or
national interest requires, the
Minister may, after consultation
with the contractor, postpone
the development of a field.
(2) In the event of a
postponement under subsection
(1), the term of the petroleum
agreement shall be extended for
the period of postponement, and
the obligation to pay acreage
fees during that period shall be
suspended.
(3) This section applies to the
Corporation where it undertakes
petroleum activities under
section 11 (I).
Commencement of petroleum
production
30. (1) Production of petroleum
shall not commence without the
written approval of the
Commission.
(2) The Commission shall, before
granting approval for the
commencement of petroleum
production, consider whether the
contractor has developed the
field in accordance with the
plan of development and
operation and with any
conditions specified in the
approved plan of development and
operation.
(3) This section applies to the
Corporation where it undertakes
petroleum activities under
section 11 (1).
Production programme and permits
31. (I) A contractor shall not
produce or inject petroleum if
the contractor does not have an
annual permit granted for that
purpose by the Commission.
(2) The annual permit shall be
obtained by application in
writing to the Commission.
.
(3) The form and content of the
application for an annual
production permit to produce and
inject petroleum shall be as
prescribed and shall include a
long-term production forecast
updated from the plan of
development and operation.
(4) The Commission shall, upon
receipt of the application from
the contractor, issue an annual
production permit stipulating
the quantity of petroleum which
may be produced or injected.
(5) The stipulation of the
quantity-specified in subsection
(4) shall be based on the
long-term production schedule in
the plan of development and
operation, unless new
information on the reservoir or
other new relevant circumstances
warrant otherwise.
(6) The Commission may include
in the production permit the
permission to flare or vent
petroleum as provided in section
33.
(7) The Commission may upon
receipt of the application made
by a contractor approve test
production of a petroleum field
and the duration, quantity and
other conditions for the test
production shall be determined
by the Commission.
(8) The Commission may,r~9.uire
a contractor to submit a report
on field related matters,
including alternative schemes
for production and where
applicable, the injection and
the total recovery factor for
the various schemes.
(9) The Commission may direct a
contractor to take appropriate
steps to increase or reduce the
rate of petroleum production to
a rate that will enhance optimum
recovery of petroleum from the
field and that will not exceed
the capacity of existing
production facilities.
(10) The Commission in
consultation with the Minister
may direct the modification of
the long term production
schedule approved in accordance
with this section when the
national interest so requires.
(11) The Minister shall, where
the decision is related.to
.several fields and requires a
reduction in production,
endeavour to apportion the
reduction proportionately among
those fields to the extent
possible.
(12) This section applies to the
Corporation where it undertakes
petroleum activities under
section 11 (1). .'
Utilisation of associated
natural gas
32. (1) Any natural gas produced
in association with crude oil
may be used in petroleum
activities as agreed between a
contractor and the Corporation,
in consultation with the
Commission and in accordance
with applicable enactments, good
petroleum industry practice and
approved production plans.
(2) This section applies to the
Corporation where it undertakes
petroleum activities under
section 11(1).
Restrictions on flaring
33. (1) A person shall not flare
or vent petroleum, unless that
person is authorised under
subsection (2) or (3).
(2) The Commission shall after
consultation with the
Environmental Protection Agency
authorise a person to flare or
vent petroleum where
(a)
it is necessary in the interests
of normal operational safety of
the petroleum activities;
(b)
it is necessary in order to
comply with a requirement
imposed under an Act; or
(c)
it is warranted by exceptional
circumstances.
(3) In case of an emergency, and
where there is insufficient time
to request an authorisation from
the Commission, a contractor may
flare or vent petroleum without
the approval of the Commission
under subsection (2), but shall
ensure that the flaring or
venting is done in accordance
with prescribed procedure and
kept at the lowest level
possible.
(4) Where petroleum has been
flared or vented in an
emergency, the contractor shall
immediately inform the Minister,
Environmental Protection Agency
and the Commission of the event.
(5) This section applies to the
Corporation where it undertakes
petroleum activities under
section 11 (1).
Co-ordination of petroleum
activities and unitisation
34. (1) Where an accumulation of
petroleum extends beyond the
boundaries of one contract area
into one or more other contract
areas, the Minister in
consultation with the Commission
may, for the purpose of ensuring
optimum recovery of petroleum
from the accumulation of
petroleum, direct the relevant
contractors, to enter into an
agreement to
develop and produce the
accumulation of petroleum as a
single unit.
(2) The agreement shall be
entered into within a period
specified by the Minister and
shall be submitted to the
Minister for approval.
(3) Where two or more
accumulations of petroleum are
in proximity to one another but
are
(a)
in different contract areas, or
(b)
in one contract area and an area
not covered by a petroleum
agreement,
the Minister may require the
accumulations of petroleum to be
developed and produced in a
coordinated manner in order to
ensure efficient petroleum
activities.
(4) Where an accumulation of
petroleum extends beyond the
boundaries of a contract area
into an area not covered by a
petroleum agreement or an
authorisation under section 11
(1), the Minister may authorise
the Corporation to enter into a
contract for the development and
production of the accumulation
of petroleum, and require the
accumulation of petroleum to be
developed as a single unit.
(5) The Minister may stipulate
conditions and make appropriate
directions to the Corporation
and the contractor as prescribed
for the unitised development and
such conditions, if
significantly different from the
conditions of the adjoining
contract area, shall be ratified
by Parliament.
Cross-border cooperation and
unitisation
35.
The Republic may, where an
accumulation of petroleum
extends onto the land or the
continental shelf of another
country, seek to reach agreement
with that other country on the
most efficient co-ordination of
petroleum activities in
connection withaccumulation of
petroleum as well as the
apportionment of the
accumulation of petroleum.
Third party use of production
facilities
36.
(1) The Commission may direct
that facilities which are owned
by a contractor or the
Corporation may be used
(a)
by others if warranted by
considerations for efficient
operation and resource
management, or
(b)
for the benefit of society where
the use would not unreason- ably
interfere with the usage
requirements of the contractor
or the Corporation or of any
person who has already been
granted the right of use.
(2) An agreement on the use of
facilities shall be submitted to
the Commission for approval and
the Commission may, as a
condition for approval, modify
the tariffs and other conditions
agreed between the parties,
having due regard to resource
management considerations and a
reasonable return on investments
for the owner.
(3) The Commission may, where an
agreement for use is not reached
within a reasonable period of
time, stipulate the tariffs and
other conditions for use, having
due regard to resource
management considerations and a
reasonable return on investments
for the owner.
(4) Where required for resource
management considerations, the
Commission may alter the
conditions of a previously
approved agreement for third
party use to ensure the
implementation or continuation
of projects.
(5) In stipulating new
conditions, the Commission shall
have due regard to resource
management considerations and a
reasonable return on investments
for the owner.
(6) The rights and obligations
of the contractor under this
section apply to the Corporation
where it undertakes petroleum
activities under section 11 (1).
Measurement of petroleum
obtained
37. (1) A contractor shall
measure and analyse the
petroleum produced, transported
and sold from a field by a
method customarily used in good
international petroleum industry
practice and in applicable
enactments.
(2) The Commission shall after
consultation with the Standards
Authority approve the
measurement system which may be
verified as prescribed.
(3) A contractor shall not alter
the
(a)
method of measurement, or
(b)
calibration of any equipment
used for measurement with- out
the written approval of the
Commission.
(4) The Commission may require
an alteration to be made only in
the presence of a person
authorised by the Commission.
(5) The Commission may direct
that the method of measurement
or the calibrated equipment be
tested or examined by the
relevant agency occasionally, or
at the intervals and by the
means prescribed.
(6) A test or examination under
subsection (5) may be done in
the presence of a person
authorised by the Commission.
(7) Where a measuring method or
calibrated equipment is found to
be incorrect, that method or
calibrated equipment is
considered to have existed in
that condition during a period
that is represented by half of
the period from the last
occasion when the method or
equipment was tested or examined
to the date when the method or
equipment was found to be
incorrect.
(8) Royalty and any other
payments due to the Government,
the Commission or the
Corporation under the petroleum
agreement for that period shall
be adjusted accordingly.
(9) A contractor who knowingly
uses an inaccurate measuring
method or an uncalibrated
equipment commits an offence and
is subject to penalties under
section 93.
(10) The Commission shall
install facilities to monitor
production.
(11) This section applies to the
Corporation where it undertakes
petroleum activities under
section 11 (1).
Transportation, Treatment and
Storage
Licence to install and operate
facilities for transportation,
treatment and storage of
petroleum
38.
(1) A person shall not install
or operate a facility for
transportation, treatment or
storage of petroleum without a
licence granted by the Minister
unless there is an existing
right to install and operate the
facility derived from the
approval of a plan of
development and operation.
(2) A person shall not commence
installation and operation of a
facility if that person does not
have a permit granted by the
Commission.
Application to install and
operate facilities
39.
(1) Subject to subsection (4),
an application for a licence to
install and operate a facility
for transportation, treatment or
storage of petroleum shall
specify a description of the
facilities and be supported with
a scoping report approved in
accordance with applicable
enactments.
(2) The description shall
contain detailed information on
economic, resources, technical,
operational, safety related,
commercial, local content and
environmental components of the
proposed project and a scoping
report approved in accordance
with applicable enactments,
including
(a)
information on the destination
of pipeline, route, landing
point, dimension and
transportation capacity of the
facility, as well as the
relevant assumptions and
selection criteria;
(b)
information on the ownership of
the facility;
(c)
a description of technical
solutions, including solutions
to prevent and minimize
environmentally harmful
discharges and emissions;
(d)
information on management
systems, including information
on the planning, organisation
and implementation of the
development;
(e)
area studies for the possibility
of third party access and use of
facilities;
(j)
a development schedule;
(g)
a description of the capacities
of facilities;
(h)
information on operation and
maintenance;
(i)
information on management
systems, including information
on the planning, organisation
and implementation of the
construction project;
(j) estimated investments and
operational costs;
(k)
a financing plan;
(I)
information on project
economics;
(m)
information on any applications
for approvals, permits and
licences required under other
applicable enactments;
(n)
information as to how the
facilities may be decommissioned
when the petroleum activities
have ceased;
(0)
a description of emergency
preparedness;
(p)
information on other factors of
importance to the resource
management; and
(q)
other information required under
the safety regulations of the
applicant in force at any time.
(3) Where the information
contained in the description
provides a proposal for the
implementation of an activity,
the Minister may require the
applicant to provide alternative
proposals.
(4) The Minister may, in
consultation with the relevant
agencies, grant an exemption
from a particular requirement
under subsection (1) where the
circumstances require.
(5) A material deviation or
alteration of the terms and
preconditions on which an
application has been submitted
or approved and a significant
alteration of facilities shall
require the prior written
approval of the Minister and
may.require a new or amended
application to be submitted for
that approval.
(6) An applicant shall not
enter into a contract of
significant value or commence
construction works until the
licence has been granted by the
Minister.
Conditions for granting of a
licence to install and operate
facilities
40.
(1) A licence to install and
operate a facility for
transportation, treatment or
storage of petroleum shall
include
(a)
ownership of the facility;
(b)
the landing point, routing,
dimension and capacity for other
pipelines;
(c)
the main technical description
and location for other
facilities; and;
(d)
decommissioning plan.
(2) The Minister may, when
granting a licence to install
and operate a facility, and at
any subsequent point in time
(a)
stipulate tariffs set by the
Commission for use of the
facility; and
(b)
direct
{i) the tie-in of the facility
to another facility;
(ii) an increase in capacity of
the facility;
(iii) a modification of the
facility to enable its use for
different types of petroleum;
and
(iv) the type of petroleum to be
transported, treated or stored.
(3) Directives in subsection (2)
(b) shall not have the
effect of unreasonably raising
the costs or impeding the use of
the facility as requested in the
application or as granted by the
Minister in an existing licence.
(4) The cost of implementation
of the directives mentioned may
be borne by the party in whose
favour the directive was made or
shall be taken into account when
the tariff is stipulated.
(5) The Minister shall appoint
one of the licensees as operator
and may approve a change of
operator upon the request of the
licensees or when there are
significant reasons to do so.
(6) The Minister shall grant the
licence for a fixed period of
time.
(7) The licence may be extended
on similar or new terms on
application to the Minister.
Landing of petroleum
41. For the purpose of this Act,
the Minister may in consultation
with the Commission and
contractor, determine the manner
and place in which petroleum is
delivered by the contractor and
the Corporation.
Third party use of
transportation, treatment and
storage facilities
42. (1) An owner and operator of
a facility for the
transportation, treatment or
storage of petroleum shall grant
third party access to the
facility on fair, transparent
and non-discriminatory terms.
(2) The access shall not be to
the detriment of the needs of
the owner, operator or other
users who have already been
granted a right of use.
(3) If the throughput capacity
of the facility is insufficient
to handle and transport the
total production entitlements of
all users, the owners of the
facility shall have a
preferential right to the
available capacity in proportion
to the ownership share.
(4) The remaining available
capacity shall be shared between
the users in proportion to the
total production entitlement of
each user which would otherwise
be available for transportation.
(5) The owner or operator of a
petroleum pipeline may charge a
transportation tariff for the
use of the pipeline by other
persons.
(6) Unless otherwise determined
by the Commission,
(a)
the transportation tariffs shall
cover the cost incurred by the
owner of the pipeline in
constructing, financing,
operating and maintaining the
pipeline and related facilities,
including a reasonable rate of
return on the investment, taking
into account the risks assumed
by the owner; and
(b)
each user including the owner of
the pipeline, shall pay a
transportation tariff calculated
in relation to the share of the
petroleum transported.
(7) A person is not entitled to
the use of a transportation,
treatment or storage facility
unless that person has entered
into an agreement with the owner
or operator of the facility.
(8) The parties shall submit an
agreement on the use of
transportation, treatment and
storage facilities to the
Commission for approval.
(9) The Commission in
consultation with the Minister
may, as a condition for
approval, change the tariffs and
other conditions agreed between
the parties, having due regard
to resource management
considerations while allowing
the owner reasonable returns,
taking in to account, investment
and risks.
(10) Where an agreement for use
is not reached within a
reasonable period of time, the
Commission in consultation with
the Minister may determine the
tariffs or other conditions for
the use, having regard to
resource management
considerations while allowing
the owner reasonable returns
taking into account investments
and risks.
(11) Where required for resource
management considerations, the
Commission in consultation with
the Minister may alter the
conditions of an approved
agreement in order to ensure
implementation or extension of
projects.
(12) The Commission shall, in
altering the conditions of an
approved agreement have due
regard to resource management
consideration, investments and
risks.
Cessation, Decommissioning and
Removal of Facilities
Decommissioning plan
43.
(1) A licensee or contractor who
operates a petroleum facility
shall submit a decommissioning
plan to the Minister and the
Minister shall seek the advice
of the Commission.
(2) Except where the Minister
determines otherwise, the
decommissioning plan shall be
submitted not more than five
years and not later than two
years before the date on which
(a)
the use of the petroleum
facility to which the
decommissioning plan relates is
expected to permanently cease
operation, or
(b)
the licence or the petroleum
agreement to which the
decommissioning plan relates
will expire.
(3) Where the licence or the
petroleum agreement is
terminated earlier than its
expiration date, the
decommissioning plan shall be
submitted by the licensee or
contractor concerned in
accordance with this section as
soon as is practicable and in
any event not later than ninety
days after the termination.
(4) The licensee or contractor
shall immediately give notice to
the Minister if the use of the
petroleum facility is expected
to cease before the expiry of
the licence or the petroleum
agreement.
(5) The decommissioning plan
shall contain a detailed
proposal for
(a)
a shutdown of operations and
disposal of petroleum
facilities; or
(b)
further use in petroleum
activities of the facilities in
place.
(6) A disposal under subsection
5 (a) may include
(a)
removal of petroleum facilities
for use elsewhere;
(b)
uses other than for petroleum
activities; or
(c)
complete or partial removal or
abandonment of the facilities.
(7) The plan shall contain
information and evaluations
necessary for the Minister to
make a decision relating to
disposal as provided in
subsections (5) and (6) and an
assessment of the environmental
a social impact of the disposal.
(8) This section applies to the
Corporation where it undertakes
petroleum activities under
section 11 (1).
Decision on the decommissioning
plan
44. (1) The Minister may approve
the decommissioning plan and
shall set out a schedule for
implementation of the plan.
(2) Where the Minister
disapproves of the
decommissioning plan, the
Minister shall notify the
licensee or contractor in
writing stating the reasons for
the disapproval and request that
(a)
certain conditions be satisfied
by the contractor or licensee;
or
(b)
a new or amended decommissioning
plan be resubmitted to the
Minister.
(3) In making the decision on
the approval or disapproval of
the decommissioning plan, the
Minister shall consider the
various interests involved,
including the impact of the
decision on local communities,
agriculture, fisheries and other
affected interests and the
environmental, safety, technical
and economic consequences of the
disposal alternatives.
(4) A licensee or contractor who
operates a petroleum facility
that is the subject of an
approved decommissioning plan
shall ensure that the
decommissioning plan is
implemented in accordance with
its terms and conditions as
specified.
(4) The licensee or contractor
shall immediately give notice to
the Minister if the use of the
petroleum facility is expected
to cease before the expiry of
the licence or the petroleum
agreement.
(5) The decommissioning plan
shall contain a detailed
proposal for
(a)
a shutdown of operations and
disposal of petroleum
facilities; \or
(b)
further use in petroleum
activities of the facilities in
place.
(6) A disposal under subsection
5 (a) may include
(a)
removal of petroleum facilities
for use elsewhere;
(b)
uses other than for petroleum
activities; or
(c)
complete or partial removal or
abandonment of the facilities.
(7) The plan shall contain
information and evaluations
necessary for the Minister to
make a decision relating to
disposal as provided in
subsections (5) and (6) and an
assessment of the environmental
a social impact of the disposal.
(8) This section applies to the
Corporation where it undertakes
petroleum activities under
section 11 (1).
Decision on the decommissioning
plan
44. (1) The Minister may approve
the decommissioning plan and
shall set out a schedule for
implementation of the plan.
(2) Where the Minister
disapproves of the
decommissioning plan, the
Minister shall notify the
licensee or contractor in
writing stating the reasons for
the disapproval and request that
(a)
certain conditions be satisfied
by the contractor or licensee;
or
(b)
a new or amended decommissioning
plan be resubmitted to the
Minister.
(3) In making the decision on
the approval or disapproval of
the decommissioning plan, the
Minister shall consider the
various interests involved,
including the impact of the
decision on local communities,
agriculture, fisheries and other
affected interests and the
environmental, safety, technical
and economic consequences of the
disposal alternatives.
(4) A licensee or contractor who
operates a petroleum facility
that is the subject of an
approved decommissioning plan
shall ensure that the
decommissioning plan is
implemented in accordance with
its terms and conditions as
specified.
(5) A licensee or contractor who
has implemented a
decommissioning plan shall
submit a report on the work
carried out to the Minister.
(6) The obligations imposed
under subsections (4) and (5)
are binding on the licensee or
contractor after the expiration
of the applicable licence or the
petroleum agreement.
(7) An assignor with a
participating interest in a
petroleum agreement or a holder
of a licence assigned in whole
or in part, shall have secondary
liability for the financial
obligations for the cost of
implementing the decommissioning
plan.
(8) The financial obligation is
limited to costs related to
petroleum facilities, including
wells, which existed at the time
of the assignment, and is
limited to a share of the costs
calculated on the basis of the
size of the participating
interest assigned.
(9) If a decommissioning plan is
not implemented within the
stipulated time limit and in
accordance with the terms and
conditions of the approval, the
Minister, in consultation with
the Commission may, take
necessary measures for
implementing the decommissioning
plan for and on behalf of the
licensee or contractor
responsible for the disposal and
on the account and risk of the
licensee or contractor including
the engagement of
sub-contractors for carrying out
of the plan.
Decommissioning fund
. 45. A licensee or
contractor shall establish a
decommissioning fund as
prescribed.
Plugging and abandonment of well
.46.
(1) A contractor shall submit to
the Commission an immediate
notice of the decision of the
contractor to abandon a well.
(2) A contractor who submits a
notice under subsection (1)
shall treat and plug the
abandoned well.
(3) The closure or plugging of a
well shall be carried out only
with the prior written approval
of the Commission and in. the
manner consistent with
international best practice and
approved by the Commission.
(4).A contractor shall conduct a
survey .of wells plugged and
abandoned as prescribed.
(5) This section applies to the
Corporation' where it undertakes
petroleum activities under
section 11 (I).
Restoration of affected areas
47.
(1) A contractor or a licensee
who operates a petroleum
facility that affects an area
shall after the termination of
the petroleum activities restore
the affected area and remove the
causes of damage or danger to
the environment in accordance
with the applicable enactments.
(2) This section applies to the
Corporation where it undertakes
petroleum activities under
section 11 (1).
Liability for decommissioning
.48. (1) A contractor or a
licensee who is under an
obligation to implement an
approved decommissioning plan
under section 44 is subject to
strict liability towards the
Republic for any loss or damage
caused, in connection with the
decommissioning of the facility
or other 'implementation of the
decommissioning plan. '
(2) This section applies to the
Corporation where it undertakes
petroleum activities under
section 11 (1).
Compliance
49.
(1) A licensee, contractor,
sub-contractor, the Corporation
and other persons engaged in
petroleum activities under this
Act shall comply with the Act,
the Regulations, directives and
requirements issued under this
Act through the establishment,
implementation and continuous
development of an appropriate
management system.
(2) A licensee, contractor,
sub-contractor, the Corporation
and any other person engaged in
petroleum activities under this
Act shall ensure compliance with
the Regulations, directives and
requirements issued pursuant to
this Act and any other
applicable enactment.
(3) A licensee, contractor, sub
"contractor, the Corporation and
any other person engaged' in
petroleum activities under this
Act shall ensure that persons
performing work directly or
indirectly' for them comply with
the Regulations, directives and
requirements issued under this
Act.
General Requirements for
Petroleum Activities
Petroleum operating standards
50.
(1) A person conducting
petroleum activities under this
Act shall conduct-petroleum
activities in a prudent
manner-and in accordance with
applicable enactments,
standards, best international
practice and sound economic
principles.
(2) Prudent petroleum
activities as prescribed in
subsection (l) include
reasonable steps to
(a)
optimise the ultimate recovery
of petroleum from a petroleum
field;
(b)
prevent waste of petroleum;
(c)
secure the health, safety and
welfare of persons and
communities; and .
(d)
protect the environment and
ensure its sustainability.
(3) Petroleum activities shall
be conducted in accordance with
directives given, restrictions
imposed or requirements made by
the Minister, the Commission and
other relevant agencies.
Supervision and inspection
51.
(1) The Commission may, in the
performance of its functions,
authorise a person to supervise
or inspect petroleum activities
to ensure that the activities
are carried out in accordance
with this Act.
(2) The Commission or the person
authorised by the Commission
under subsection (1) may
(a)
enter any area, structure,
platform, vehicle, installation,
vessel, aircraft, facility,
office or building used for
petroleum activities;
(b)
inspect, test or audit the
works, equipment, operations,
records, registers and financial
accounts of a licensee,
contractor, sub-contractor or
the Corporation that is related
to or used in petroleum
activities;
(c)
in collaboration with relevant
authorities, take or remove
samples of petroleum, water or
other substance for the purposes
of analysis or testing;
(d)
inspect, take extracts from, or
make copies of any document
relating to the petroleum
activities;
(e)
direct a vessel or a mobile
facility to be brought to a port
in Ghana when considered
necessary for the purpose of
super- vision or inspection
under this Act; or
(f) conduct examinations,
inquiries and relevant
activities that are necessary to
ensure that the provisions of
this Act, the Regulations, the
petroleum agreement and any
licence are being compl-ied
with.
(3) A person subject to
supervision or inspection under
this Act shall, when so demanded
by the Commission or a person
authorised by the Commission and
in spite of any requirement for
confidentiality, provide
information that is considered
necessary for the performance of
the supervision or inspection.
(4) A licensee, contractor,
sub-contractor or the
Corporation shall provide the
Commission or the person
authorised by the Commission
under subsection (1) with
reasonable facilities and
assistance to enable the
effective and timely performance
of the supervisory or inspection
functions under this section.
(5) The Commission may issue
directives as are necessary for
the implementation of this
section.
(6) The Commission may require
the licensee, contractor,
sub-con- tractor or the
Corporation being supervised or
inspected under this section to
bear the expenses related to the
supervision or inspection.
Ownership of petroleum data
52.
(1) Data and information
obtained by a licensee,
contractor, sub-contractor or
the Corporation as a result of
petroleum activities and the
geological, geophysical,
technical, fmancial and economic
reports, studies,
interpretations and analyses
prepared by or on behalf of a
licensee, a contractor,
sub-contractor or the
Corporation in connection with
petroleum activities shall be
the property of the Republic.
(2) Subject to section 53 (5), a
licensee, contractor or
sub-contractor may, for the
duration of a licence or
petroleum agreement, use the
data and information under
subsection (1).
(3) The licensee, contractor,
sub-contractor or Corporation
shall provide to the Commission
data and information as well as
the reports, studies,
interpretations and analyses
under subsection (1).
(4) The Commission may permit a
licensee, contractor, sub-
contractor or the Corporation to
market the right of use to
geological, geophysical and
technical data, reports, studies
and interpretations on terms to
be agreed.
(5) The Commission may provide
any data or information to the
Corporation for its use.
Samples, data and information
53.
(1) A licensee, contractor,
sub-contractor and the
Corporation shall maintain
complete and accurate records in
Ghana of the petroleum
activities carried out by the
licensee, contractor,
sub-contractor or the
Corporation shall also complete
and keep accurate books of
account, records and registers
relating to these activities.
(2) A licensee, contractor,
sub-contractor or the
Corporation shall not export or
permit the retention or
exportation of data, documents
or geological and reservoir
samples including cuttings,
cores, liquid and gas samples
without the written approval of
the Commission.
(3) At the expiry of a licence
or petroleum agreement, the data
and information under section 52
(1) shall be returned to the
Commission.
(4) Where the data, documents or
samples are exported, the
contractor, sub-contractor or
licensee shall return the data,
documents or samples to this
country forthwith at the written
request of the Commission.
(5) A licensee, contractor,
sub-contractor or the
Corporation shall, where any
interpretation or analysis is
done outside the country,
forward to the Commission not
later than thirty days after the
interpretation or analysis,
copies of the reports on the
interpretation or analysis.
(6) A licensee, contractor,
sub-contractor or the
Corporation shall keep
confidential the data acquired
and any existing data released
by the Commission to the
licensee, contractor,
sub-contractor or the
Corporation and shall not
disclose the data to a third
party without permission from
the Commission except as may
otherwise be provided in
accordance with the terms of a
petroleum agreement or petroleum
sub-contract.
Reporting
54.
(1) A contractor and a licensee
shall, at the intervals
determined by theCommission,
submit to the Commission
information as prescribed.
(2) This section applies to the
Corporation where the
Corporation undertakes petroleum
activities under section 11 (1).
Information concerning petroleum
activities
55.
(1) The Minister or the
Commission may request a person
conducting petroleum activities
to provide information relevant
to the activities.
(2) The information shall be
submitted to the Minister, the
Com- mission or other relevant
agency as designated by the
Minister or the Commission,
within the specified period.
(3) Information received under
this section may be used only
for the purposes prescribed.
Petroleum register
56.
(1) The Commission shall
establish and maintain a
register of petroleum
agreements, licences, permits
and authorisations as
prescribed.
(2) The register shall be open
to the public.
Mortgaging of participating
interest
57.
(1) A contractor or licensee
shall not mortgage a
participating interest under
(a)
a petroleum agreement; or
(b)
a licence under section 38
without the written approval of
the Minister.
(2) A contractor or licensee
shall not mortgage the
participating interest under
subsection (1) for the benefit
of petroleum activities outside
this country.
(3) The Minister may, in special
circumstances, permit mortgaging
of the participating interest
for the benefit of petroleum
activities in this country which
is not related to the petroleum
agreement or licence.
(4) The participating interest
under subsection (1) comprises
those rights which at any time
arise from the petroleum
agreement or licence as well as
other rights in connection with
activities carried out in
accordance with the petroleum
agreement or licence.
(5) A mortgage under this
section shall be registered in
the petroleum register.
(6) A mortgage registered under
this section shall lapse if the
facility mortgaged is
decommissioned.
Security for fulfilment of
obligations
58.
A licensee, contractor or
sub-contractor shall provide the
Minister with the performance
bonds or guarantees as the
Minister may require for the
fulfilment of the obligations
undertaken by the licensee,
contractor or sub-contractor and
for possible liabilities arising
out of the petroleum activities
undertaken under the licence,
petroleum agreement or petroleum
sub-contract.
Liabilities
59.
(1) Subject to subsection (2),
licensee parties or contractor
parties, who jointly hold a
petroleum agreement or a licence
are jointly and severally
responsible to the Republic for
the financial and other
obligations and liabilities
arising out of the petroleum
activities.
(2) A contractor and a licensee
are not jointly and severally
responsible for payment of
taxes, royalties in cash and
additional oil entitlement.
(3) A licensee, contractor or
sub-contractor shall keep the
Repul-uc and the Corporation
indemnified against claims
arising from the operations of
the licensee, contractor or
sub-contractor brought by a
third party.
(4) Where third party liability
is incurred by a person who
under- takes a task for a
licensee, contractor,
sub-contractor or the
Corporation, the licensee,
contractor, sub-contractor or
the Corporation is liable for
damages to the same extent as,
and jointly and severally with
the person undertaking the task
and if applicable, the employer
of the person.
Employment and training of
Ghanaian citizens
60.
(1) A licensee, contractor,
sub-contractor or the
Corporation shall ensure that
Ghanaian citizens who have the
requisite expertise or
qualifications in various levels
of activities are employed in
accordance with applicable
enactments, the terms and
conditions of the licence,
petroleum agreement or petroleum
sub-contract.
(2) A person carrying out
petroleum activities shall be
required to employ Ghanaian
citizens in categories and
functions as prescribed.
(3) Subject to subsection (2), a
person carrying out petroleum
activities shall not engage in
discriminatory practices on
grounds of race, tribe,
nationality or gender in the
conditions of service provided
for personnel.
(4) A person carrying out
petroleum activities shall in
consultation with the Commission
prepare and implement plans and
programmes to train citizens in
all aspects of petroleum
activities in accordance with
the Regulations and the terms of
the licence, petroleum agreement
or petroleum sub-contract.
Use of Ghanaian goods and
services
61.
(1) A licensee, contractor,
sub-contractor or any other
allied entity shall
(a)
acquire materials, equipment,
machinery and consumer goods
which ~re produced or provided
for in the country by an
indigenous Ghanaian company and
which
(i) are of the same or similar
quality as foreign materials,
equipment, machinery and
consumer goods, and
(ii) are available for sale and
delivery in due time at prices
which are not more than ten per
cent higher than the imported
items including transportation
and insurance costs and customs
charges due;
(b)
contract local service providers
to the extent to which the
services they provide are
similar to those available on
the international market and
their prices, when subject to
the same tax charges, are no
more than ten per cent higher
than the prices charged by
foreign contractors for similar
services.
(2) This section applies to the
Corporation where it undertakes
petroleum activities under
section 11 (1).
Technology transfer
62.
(1) For the purposes of
technology transfer, the
Commission shall encourage and
facilitate the formation of
joint ventures, partnership and
the development of licensing
agreements amongst indigenous
Ghanaian companies, foreign
contractors and service or
supply companies interested in
the petroleum industry where
applicable.
(2) This section shall not be
interpreted to disable the
licensee, contractor,
sub-contractor or the
Corporation from protecting its
competitive position in the
petroleum industry.
Local content plan
63.
(1) A licensee, contractor or
sub-contractor shall prepare and
implement a local content plan
as prescribed.
(2) The local content plan shall
be submitted to the Commission
for approval.
(3) The local content plan
includes
(a)
a plan for fulfilling the
applicable Ghanaian content
requirements with respect to the
provision of goods and services;
(b)
a plan for the transfer to the
Corporation of technological
know-how and skills related to
petroleum activities; and
(c)
a detailed annual recruitment
and training programme.
(4) The licensee, contractor or
sub-contractor shall submit an
annual report on the local
content plan, describing the
initiatives taken in the
preceding year and their
results.
Establishment of the Local
Content Fund
64.
There is established by this Act
a Local Content Fund.
Object of the Fund
65.
(1) The object of the Fund is to
provide financial resources for
citizens and indigenous Ghanaian
companies engaged in petroleum
activities.
(2) For the purposes of
achieving the object of the
Fund, moneys from the Fund shall
be applied to
(a)
education, training, research
and development in petroleum
activities for Ghanaian
citizens, indigenous Ghanaian
companies and Ghanaian
institutions of learning; and
(b)
loans on a competitive basis to
small and medium scale
enterprises to support their
participation in petroleum
activities.
Sources of money for the Fund
66.
(1) The sources of money for the
Fund include
(a)
contributions from a contractor
as agreed in a petroleum
agreement;
(b)
contributions from a
sub-contractor of the sum of one
per cent of the total
consideration payable by the
contractor or licensee for every
contract;
(c)
moneys approved by Parliament;
and
(d)
grants.
(2) The moneys of the Fund shall
be paid into a bank account
opened by the Board of the
Commission with the approval of
the Controller and
Accountant-General.
(3) Payments from the Fund shall
be signed by
(a)
the chairperson of the Board and
the Chief Executive of the
Commission; or
(b)
the chairperson of the Board and
one other member of the Local
Content Committee.
Management of the Fund
67.
(1) The Fund shall be
administered by the Minister and
the Local Content Committee set
up under section 8 of the
Petroleum Commission Act, 2011
(Act 821).
(2) The Minister and the Local
Content Committee shall for the
purpose of administering the
Fund
(a)
formulate policies to generate
money for the Fund;
(b)
determine the allocations to be
made towards the objectives of
the Fund; and
(c)
determine the annual targets of
the Fund.
(3) The Minister shall approve
the annual budget of the Fund.
(4) The Local Content Committee
may invest a part of the moneys
of the Fund that it considers
appropriate in the manner
approved by the Minister in
consultation with the Minister
responsible for Finance.
(5) The Fund is exempt from the
payment of tax.
Accounts and audit
68.
(1) The Local Content Committee
shall keep books of account and
proper records in relation to
them in the form approved by the
Auditor- General.
(2) The Commission shall submit
the accounts of the Fund to the
Auditor-General for audit within
three months after the end of
the financial year.
(3) The Auditor-General shall
not later than three months
after the receipt of the
accounts, audit the accounts and
forward a copy of the audit
report to the Minister.
(4) The financial year of the
Fund is the same as the
financial year of the
Government.
Annual report and other reports
69.
(1) The Commission shall, within
one month after the receipt of
the audit report, submit an
annual report covering the
operations of the Fund for the
year to which the report relates
to the Minister.
(2) The annual report shall
include the report of the
Auditor- General.
(3) The Minister shall, within
one month after the receipt of
the annual report, submit the
report to Parliament with a
statement that the Minister
considers necessary.
Incorporation of local company
70.
(1) Except for licensees and
sub-contractors that may by
appli- cable enactments be
exempted from the requirements
of this subsection, a
contractor, sub-contractor or
licensee shall
(a)
incorporate in this country
under the provisions of the
Companies Act, 1963 (Act 179), a
company to carry out solely
petroleum activities in respect
of licences, petroleum
agreements or petroleum
sub-contracts and that company
shall be
(i) the legal entity granted a
licence, or
(ii) the signatory to the
petroleum agreement or the
petroleum sub-contract;
(b)
maintain an office in this
country from which the petroleum
activities shall be managed;
(c)
have in charge of the office a
representative with full
authority to act and to enter
into binding commitments on
behalf of the licensee,
contractor or sub-contractor;
and
(d)
in respect of the petroleum
activities, open and maintain an
account with a bank in this
country.
(2) The Minister may stipulate
specific requirements in respect
of the structure and the capital
of the company incorporated in
this country.
Domestic supply requirement
71.
(1) Subject to subsection (5), a
contractor may export from the
Republic, petroleum which the
contractor is entitled to export
under the terms of a petroleum
agreement.
(2) A contractor shall sell to
the Republic at the prevailing
market price as prescribed, for
the same period a percentage of
the petroleum to which the
contractor is entitled, to meet
domestic supply requirements as
determined by the Minister.
(3) Domestic supply requirement
is the difference between the
total petroleum entitlements of
the Republic and the Corporation
and the total volume of
petroleum in barrels of oil or
mmscfd of gas equivalent of
petroleum products required to
meet the demand in the country.
(4) The volume of petroleum to
be supplied by the contractor
shall be calculated on the basis
of the pro rata share of the
petroleum to which the
contractor is entitled, but each
party's obligation to supply
petroleum for domestic supply
requirement shall not exceed the
total of the entitlement of that
party under the petroleum
agreement.
(5) In the event of war or other
emergency affecting energy
supplies, the Minister may
require a contractor or the
Corporation to supply all or
part of the quantity of
petroleum produced at the
prevailing market price to the
Republic or any agency of the
Republic.
Interference with lawful
activities, compensation and
access to land
72. (1) Where the conduct of
petroleum activities is likely
to affect any lawful economic or
social interest or activity of
the inhabitants of an area, the
Corporation or in the case of a
licensee, the Commission shall
negotiate the appropriate
permission required from the
relevant authorities and
interested persons and the
licensee, the contractor or the
Corporation shall pay the agreed
compensation to the interested
persons.
(2) Where there is hindrance to
the acquisition of property, the
property may be acquired for the
Corporation under the State
Lands Act, 1962 (Act 125) and
the Corporation shall bear the
cost.
Health and Safety, Security and
Environment
Safety requirements and
standards
73. (1) Petroleum activities
shall be conducted in a manner
that ensures that a high level
of safety is achieved,
maintained and further developed
in accordance with technological
developments, best international
practice and applicable
enactments relating to health,
safety and labour.
(2) A plan and related documents
for implementation of safety
measures of petroleum activities
shall be submitted to the
Commission before the
commencement of the relevant
petroleum activities.
(3) The plans and documents
shall be updated as and when
required.
Safety precautions
74. A licensee, contractor,
sub-contractor and the
Corporation shall
(a)
identify the hazards and
evaluate the risks associated
with any work performed in the
course of petroleum activities
which constitute a hazard to the
health and safety
(i) of persons employed for
purposes of that work, and
(ii) of persons otherwise
present at or in the vicinity of
the facility, and the steps that
need to be taken to comply with
the provisions of this Act and
Regulations;
(b)
ensure the safety of the persons
referred to in paragraph (a)
and prevent their exposure
to the hazards or where
prevention is not reasonably
practicable, minimize their
exposure; and
(c)
ensure that the persons referred
to in paragraph (a) are
duly informed of the safety
precautions.
Emergency preparedness
75. A person conducting
petroleum activities shall at
all times
(a)
maintain efficient emergency
preparedness to prevent,
control, handle and minimize
accidents and emergencies which
may lead to loss of life or
personal injury, pollution
or major damage to property
including fire, oil spills, gas
leakages, blow-outs, accidents
or other emergency situations;
and
(b)
ensure that necessary measures
are taken to prevent or reduce
harmful effects, including the
measures required to return the
environment to the condition it
was before the accident
occurred.
Emergency preparedness against
deliberate attacks
76. A licensee, contractor,
sub-contractor or the
Corporation shall implement and
maintain preventive security
measures, including control of
personnel and goods, to protect
their petroleum facilities and
wells from deliberate attacks
and shall have contingency plans
to deal with those attacks.
Safety zones
77. (1) Every petroleum facility
and well shall be surrounded by
a safety zone, unless otherwise
determined by the Commission.
(2) The Commission shall, in
consultation with relevant
authorities, determine the
delimitation of the safety zone.
(3) Unauthorised vessels,
vehicles, fishing gear or other
objects or crafts shall not
enter a safety zone established
under this section.
(4) The Commission may permit
lawful activities to take place
in the zone or in parts of the
zone if the activities can be
conducted without threatening
safety or interfering with the
exercise of the petroleum
activities.
(5) The Commission may determine
and establish the boundaries of
the safety zone as prescribed
before the placement of
petroleum facilities.
(6) In the event of accidents
and emergencies, the Commission
may establish or extend a safety
zone under subsection (5).
(7) The Commission may decide
that a safety zone shall be
established for abandoned wells,
abandoned or decommissioned
facilities or parts of those
facilities.
(8) The Minister may, with the
advice of the Commission and any
other relevant agency, determine
that a safety zone should extend
across the international
boundary with another State and
may initiate the appropriate
processes for implementation.
(9) The Minister and the
Commission shall consult the
other relevant authorities and
agencies for the purpose of
establishing and managing a
safety zone under this section.
Suspension of petroleum
activities
78. (1) Where an accident or
emergency may lead to or has
resulted in loss of life or
personal injury, pollution or
major damage to property, the
licensee, contractor,
sub-contractor or the
Corporation shall,
(a)
to the extent necessary, suspend
the petroleum activities for as
long as required by the
petroleum operating standards
under section 50; and
(b)
immediately but not later than
forty eight hours, inform the
Minister and the Commission of
the suspension.
(2) In the event of emergencies
or accidents under subsection
(1), the Minister may, acting on
the advice of the Commission,
(a)
direct that petroleum activities
be suspended to the extent
necessary if required in the
public or national interest; or
(b)
impose particular conditions to
allow continuation of the
activities.
Measures to ensure safety
79.
(1) Where a licensee,
contractor, sub-contractor or
the Corporation fails to conduct
the activities in a safe manner
in accordance with applicable
enactments and best
international practice, the
Commission may take necessary
measures to ensure safety and
may recover the costs and
expenses of doing so from the
licensee, contractor,
sub-contractor or the
Corporation.
(2) The Commission may take
measures under subsection (1)
only after giving the
contractor, sub-contractor,
licensee or the Corporation
reasonable notice.
Qualifications
80.
The licensee, contractor,
sub-contractor and the
Corporation shall ensure that a
person engaged in petroleum
activities possesses the
requisite qualifications and
competence to perform the
functions in a prudent manner.
The Environment and Liability
for Pollution Damage
Environmental principles and
protection
81.
(1) A person who undertakes
petroleum activities shall take
into account and give effect to
the environmental principles
prescribed in the Environmental
Protection Agency Act, 1994 (Act
490), subsidiary legislation
made under that Act and any
other applicable enactments.
(2) A licensee, contractor,
sub-contractor or the
Corporation undertaking
petroleum activities shall
(a)
take necessary measures to
ensure that petroleum activities
are conducted in a safe and
secure manner, free from
accidents, waste dumping and
pollution;
(b)
establish and implement
effective and safe systems for
(i) the disposal and treatment
of waste, and
(ii) the prevention of pollution
resulting from petroleum
activities, in accordance with
applicable enactments and best
petroleum industry practice; and
(c)
establish a system to track the
source, transport and
destination of potential
hazardous waste from petroleum
activities.
Impact assessment
82. (1) A person shall not
conduct petroleum activities in
an area unless the required
environmental impact assessment
has been conducted or any other
relevant environmental statutory
requirement as prescribed in the
Environmental Protection Agency
Act, 1994 (Act 490) and other
applicable enactments have been
complied with including ,
(a)
reconnaissance activities under
section 9;
(b)
exploration drilling under
section 24;
(c)
development and operation under
section 27;
(d)
construction of transportation,
treatment and storage facilities
under section 38;
(e)
decommissioning under section
43; and
(f)
plugging and abandonment of a
well under section 46.
(2) A strategic impact
assessment shall be undertaken
before the opening of a new area
under section 7.
Liability for pollution damage
83. (1) A licensee, contractor
or the Corporation carrying out
petroleum activities under
section 11(1) is strictly liable
for any pollution damage caused
by or resulting from the
petroleum activities.
(2) Where several licensees or
contractor parties are involved
in
the petroleum activities, the
parties are jointly and
severally liable for any
pollution damage caused by or
resulting from the petroleum
activities.
(3) Where pollution damage
occurs as a result of petroleum
activities conducted without
proper authorisation
(a)
the person who conducted the
petroleum activity; and
(b)
any other person who took part
in the petroleum activity and
who knew or should have known
that the activity was conducted
without proper authorisation.
are strictly liable for the
damage.
(4) The licensee, contractor,
sub-contractor or the
Corporation shall institute the
necessary measures to remedy any
pollution caused.
(5) Where the remedial measures
are not taken within the time
limit set by the Commission or
the Minister, a third party may
be engaged for the performance
of the measures, and the
licensee, contractor,
sub-contractor or the
Corporation shall be liable for
any related costs.
Compensation for pollution
damage
84. (1) Where there are several
contractor parties under a
petroleum agreement or several
licensees under one licence, a
claim for compensation for
pollution damage shall initially
be made against the operator.
(2) Where there are several
licensees or contractor parties
and one of them fails to pay the
share of the compensation, the
unpaid amount shall be paid by
the other licensees or
contractor parties in proportion
to their participating interest.
(3) Where an event of force
majeure results in pollution
damage, the Minister shall, on
the advice of the Commission,
assess the damage taking into
account
(a)
the scope of the activity,
(b)
the measures taken to avoid or
mitigate the effects of the
force majeure event,
(c)
the situation of the party that
has sustained the damage as a
result of the force majeure
event, and
(d)
the insurance opportunities for
each party.
(4) On the basis of the
assessment, the Minister shall
require the person liable for
the pollution damage to pay
compensation.
Fiscal Provisions
Payment of royalties
85. (1) The contractor shall pay
to the Republic royalty in
respect of gross volume of
petroleum produced and saved.
(2) The royalty to be paid is as
prescribed, except that where
the rates of royalty payable are
not prescribed, royalty shall be
paid as other- wise provided in
accordance with the terms of a
petroleum agreement in respect
of the area to which the
agreement relates.
(3) Royalty at the rate
specified shall be delivered to
the Republic in kind unless the
Minister directs in writing that
the royalty shall be paid in
cash to the Republic.
(4) The Minister may instruct
the contractor to undertake
transportation, processing and
storage of royalty petroleum in
kind on terms and priority which
are no less favourable than the
contractor's own petroleum from
the relevant contract area.
(5) The Corporation in carrying
out petroleum activities under
section (11) (1) is subject to
the payment of royalty at the
rates that may be prescribed.
(6) The Minister may determine
that payment of royalty in kind
shall be made to the Corporation
on behalf of the Republic and
the proceeds from the sale of
the royalty shall be paid by the
Corporation to the Republic as
prescribed.
Annual fee in respect of acreage
86. (1) A contractor shall pay
the Republic annual acreage
fees.
(2) The Minister shall prescribe
the amount to be paid, except
that where the amount is not
prescribed, the annual acreage
fees shall be as provided in
accordance with the terms of a
petroleum agreement in respect
of the area to which the
agreement relates.
(3) This section applies to the
Corporation where it undertakes
petroleum activities under
section 11 (1).
Tax
87. A licensee, contractor,
sub-contractor and the
Corporation shall pay taxes,
including petroleum income tax
and capital gains tax in
accordance with applicable
enactments.
Bonus payments
88. A contractor shall pay bonus
to the Republic as may be
prescribed, except that where
the type and quantum of the
bonus payable is not prescribed,
the bonus shall be paid as
otherwise provided in accordance
with the terms of a petroleum
agreement in respect of the area
to which the agreement relates.
Additional oil entitlement
89. The Republic is entitled to
a portion of a contractor's
share of petroleum produced from
each field on the basis of the
after-tax inflation-adjusted
rate of return that the
contractor achieved with respect
to each field.
Miscellaneous Provisions
Natural resources other than
petroleum resources
90. (1) A petroleum agreement
shall not affect the right of a
person
other than the contractor to
undertake exploration for and
production
of natural resources other than
petroleum, provided the grant
does not
unreasonably interfere with the
petroleum activities.
(2) The right to undertake
exploration for and production
of natural resources other than
petroleum includes the right to
conduct scientific research.
(3) Where natural resources
other than petroleum have been
discovered in a contract area
and the continued activities in
respect of other natural
resources cannot take place
without unreasonably interfering
with the conduct of petroleum
activities, the Minister shall
in consultation with the
relevant authorities and the
affected persons determine the
extent to which any of the
activities shall be postponed.
(4) In making the
determination in respect of a
postponement,
the Minister shall take into
account
(a)
the nature of the discovery
made,
(b)
investments made,
(c)
the stage of the activities, and
(d)
the duration and extent of the
activities and their economic
and social impact.
(5) A contractor whose petroleum
activities have been postponed
may apply for extension of the
petroleum agreement for a period
of time corresponding to the
period of postponement.
(6) Where the postponement only
applies to a limited part of the
petroleum activities the
Minister may
(a)
stipulate a shorter period for
the extension;
(b)
refuse the extension; or
(c)
grant the extension only for
part of the contract area.
(7) Where the postponement
delays the fulfilment of a work
obligation within the stipulated
time limit, under a petroleum
agreement, the time limit for
fulfilment of the work
obligation shall be extended
accordingly.
(8) Where petroleum activities
under a petroleum agreement are
postponed, the annual acreage
fee for the extended period
shall be waived or reduced at
the discretion of the Minister
but fees paid in advance shall
not be refunded.
(9) The Minister may direct that
the person authorised to
maintain activities shall wholly
or in part refund the costs
incurred and other reasonable
costs to the person that has to
postpone or curtail activities.
(10) Where the exploration for
and production of natural
resources other than petroleum,
affects the activities of a
licensee the provisions of this
section shall apply to the
extent relevant.
Transactions between contractor
and affiliates
91. Subject to this Act, a
transaction between a contractor
or sub-contractor and an
affiliate in relation to
petroleum activities to be
carried out under this Act shall
be on the basis of prevailing
international competitive prices
and other terms and conditions
that would be fair and
reasonable if the transaction
had. taken place between the
contractor or sub-contractor and
a non-affiliate .
. Insurance
92. (1) Petroleum activities
conducted under a petroleum
agreement or under a
transportation, treatment or
storage licence shall be covered
by insurance at all times and in
accordance with the Insurance
Act, 2006 (Act 724) and other
applicable enactments.
(2) The insurance shall include
cover for
(a)
damage to petroleum facilities,
(b)
pollution damage and other
liability towards third parties,
(c)
wreckage removal and cleanup
resulting from accidents, and
(d)
employees of the contractor or
of the licensee engaged in the
activities.
(3) A contractor, licensee or
the Corporation shall ensure
that a sub-contractor insures
the employees of the
sub-contractor to the same
extent as the contractor or
licensee insures their own
employees.
(4) A contractor, sub-contractor
and the Corporation or a
licensee shall procure
reasonable insurance cover under
subsection (2) (a) to
(c).
(5) The Commission in
consultation with the National
Insurance Commission may give
approval to the contractor or
the licensee to arrange another
form of security other than
insurance cover.
(6) A contractor or licensee
shall at the beginning of each
year submit to the Commission
copies of existing insurance
policies.
(7) The Commission may require
additional insurance to be
procured.
Offences and penalties
93. (1) A person who
(a)
interferes with or obstructs the
(i) Corporation,
(ii) a contractor, or
(iii) sub-contractor,
or their agents or employees in
the exercise of a right under
this Act; or
(b)
wilfully obstructs, hinders or
assaults any other person in the
exercise of a right, power or in
the performance of a function
under this Act,
commits an offence and is liable
on summary conviction to a fine
of not less than one thousand
penalty units and not more than
ten thousand penalty units and,
where the offence continues, to
a fine of not more than one
thousand penalty units for each
day during which the offence
continues or to a term of
imprisonment of not less than
one year and not more than three
years or to both.
(2) Except as otherwise provided
under this section, a person who
undertakes petroleum activities
in contravention of this Act,
commits an offence and is liable
on summary conviction to a fine
of not less than ten thousand
penalty units and not more than
fifty thousand penalty units
and, where the offence
continues, to a fine of not more
than one thousand penalty units
for each day during which the
offence continues or to a term
of imprisonment of not less than
one year and not more than three
years or to both.
(3) Where an offence under
subsection (1) or (2) is
committed by a body corporate or
a partnership or other firm a
director or officer of that body
corporate or partnership or any
person concerned with the
management of the firm shall be
deemed to have committed the
offence.
(4) A person shall not be
convicted of an offence under
subsection (3), if it is proved
that
(a)
due diligence was exercised to
prevent the commission of the
offence; and
(b)
the offence was committed
without the knowledge, consent
or connivance of that person.
(5) A person
(a)
other than the Corporation who
engages in the exploration,
development or production of
petroleum without a petroleum
agreement commits an offence and
is liable on summary conviction
to a fine of not less than four
hundred thousand
penalty units and not more than
five hundred thousand penalty
units;
(b)
who assigns a petroleum
agreement directly or indirectly
either in whole or in part,
without the approval of the
Minister commits an offence and
is liable on summary
conviction to a fine of not less
than one hundred thousand
penalty units and not more than
two hundred thousand penalty
units;
(c)
who commences to implement a
plan of development and
operation without the approval
of the Minister
(i) is, in the first instance
liable to pay to the Commission
an administrative penalty of the
Ghana Cedi equivalent of one
million United States Dollars
for each day of the first ninety
days that the operation is
carried on without approval; and
(ii) after the ninety day period
referred to in subparagraph (i),
is liable to pay an additional
administrative penalty of not
more than eight hundred thousand
penalty units and the petroleum
agreement may be terminated; and
where that person fails to pay
the penalty under paragraphs (i)
and (ii), that person commits an
offence and is liable on summary
conviction to a term of
imprisonment of not less than
two years and not more than five
years;
(d)
who fails to submit a
decommissioning plan as
specified in section 43
(i) is, liable to pay to the
Commission an administrative
penalty of the Ghana Cedi
equivalent of one hundred and
twenty thousand United State
Dollars for each day of the
first thirty days that the
decommissioning plan is not
submitted after the expiration
of the period for the submission
of the decommissioning plan or
the implementation of the
decommissioning plan; and
(ii) is, after the thirty days,
liable on summary conviction to
an additional fine of not less
than two hundred thousand
penalty units and not more than
five hundred thousand penalty
units or to a term of
imprisonment of not less than
one year and not more than three
years or to both;
(e)
who contravenes subsection (2)
of section 23
,
(i) shall pay to the Commission
an administrative penalty of the
Ghana Cedi equivalent of one
hundred thousand United States
Dollars for each of the first
thirty days that the amount
becomes due to the Corporation
in addition to the amount owed
under subsection (2) of section
23; or
(ii) is, after the thirty day
period, liable on summary
conviction to a fine of not less
than one thousand penalty units
and not more than two hundred .
thousand penalty units in
addition to the amo.mt owed
under subsection (2) of section
23;
(f)
who fails to pay the annual fees
in respect of the acreage to
which the petroleum agreement
relates for the relevant period
shall
(i) pay to the Commission an
administrative penalty of five
percent of the annual fee for
each day of the first thirty
days after the annual fee
becomes due in addition to the
outstanding annual fee; and
(ii) after the thirty day period
referred to in subparagraph (i),
pay to the Commission an
administrative penalty of one
hundred thousand penalty units
in addition to the outstanding
annual fee;
(g)
who fails to comply with a
request to provide information
under this Act within the period
specified in the request, shall
'Pay to the Commission an
administrative penalty of ten
thousand penalty units in the
first instance and a further
penalty of ten per cent of the
penalty for each day that the
information is not provided.
Authority to issue Regulations,
guidelines and stipulate
conditions 94. (1) The Minister
may, by legislative instrument,
make Regulations to prescribe
for the matters that are
necessary for carrying out or
giving effect to this Act.
(2) Without limiting subsection
(1), the Minister may make
Regulations to provide for
(a)
matters to ensure the safe
construction, maintenance and
operation of installations,
facilities and equipment used in
connection with petroleum
activities;
(b)
the health, safety and welfare
of persons employed in or
affected by petroleum
activities;
(c)
environmental protection,
including the prevention of
pollution and pollution damage
and the taking of remedial
action to prevent pollution
damage as a result of petroleum
activities;
(d)
the inspection of areas in which
petroleum activities are being
carried out and of the plant,
machinery and equipment within
those areas;
(e)
reporting of and inquiries into
accidents arising out of
petroleum activities for record
purposes;
(f)
keeping and inspection of
records, accounts, statistics
and plans with respect to
petroleum activities;
(g)
submission of information;
(h)
the protection of fishing,
navigation, and any other
activities carried out within or
in the vicinity of areas in
which petroleum activities are
being carried out;
(i)
the standards for petroleum and
petroleum products and their
transportation;
(j)
fiscal requirements, including
terms and conditions for taxes,
royalties, bonuses, fees, oil
entitlement and, where
applicable, ring-fencing;
(k)
area management, including the
establishment of a reference
map, the opening of new areas,
and the closure and redefinition
of areas;
(I)
procedures and conditions for
the granting of petroleum
agreements, including
qualification requirements,
terms and conditions for open
and competitive tendering
procedures and direct
negotiations;
(m)
the determination of the value
of crude oil and natural gas;
(n)
the determination of the
domestic supply requirement;
(0)
the conservation of natural
resources and the avoidance of
waste, whether petroleum or
otherwise, of the land to which
this Act applies;
(P)
accounting procedures and
reporting;
(q)
the minimum conditions of
service for workers engaged in-
petroleum activities;
(r)
the terms and conditions of
petroleum agreements;
(5) the rates or methods of
setting the rates at which
petroleum and water may be
recovered from a well or a
petroleum reservoir;
(t)
the methods to be used for the
measurement of petroleum, water
and other substances from a
well;
(u)
the pressure maintenance in, or
re-pressuring of, a petroleum
reservoir and the recycling of
petroleum;
(v)
the terms and conditions under
which the Corporation shall
undertake the exploration,
development and production of
petroleum in association with a
contractor under section 11
(2);
(w)
the specified areas in which the
exercise of rights of a con-
tractor under this Act to carry
out petroleum activities shall
be restricted;
(x)
the penalties for offences
against the Regulations;
(y)
local content and local
participation;
(z)
matters of health, safety,
environment and welfare of com-
munities;
(aa)
contents of plan of development
and operation, require ments and
conditions for the plan and any
other matter concerning the
application and approval of the
plan;
(bb)
decommissioning and
decommissioning fund;
(cc)
the procedure to determine the
payment of compensation to
owners or occupiers of land
where petroleum activities are
carried out;
(dd)
the contents of an application
for reconnaissance licence,
licensee qualification
requirements, the scope of the
licence, the further conditions
of the licence and the fee to be
paid;
(ee)
exploration activities,
including exploration period and
extension, relinquishment, work
obligations and exploration
drilling;
(ff)
identification, designation and
name of installations,
facilities, wells and fields;
(gg)
measures and requirements for
emergency preparedness;
(hh)
requirements relating to
boundaries;
(ii)
conditions and terms for safety
zones;
(jj)
conditions for reporting and
licensing of data;
(kk)
conditions for the arrangement,
contents of and keeping of the.
petroleum registry;
(II)
the contribution of contractors
to the provision of security of
the State;
(mm)
the requirements relating to
management systems;
(nn)
conditions for third party
access and stipulation of
tariffs;
(00)
compensation for affected lawful
activities including fisheries;
and
(pp)
classifying companies as small
or medium to achieve the object
of this Act.
(3) The Minister may issue
guidelines for the
implementation of the provisions
of this Act and the guidelines
shall be published in the
Gazette.
(4) In connection with
individual administrative
directives, other conditions,
than those mentioned in this
Act, may be stipulated when they
are naturally linked with the
measures or the activities to
which the individual
administrative directive
relates.
Interpretation
95. In this Act, unless the
context otherwise requires,
"additional oil entitlement" has
the meaning given to it in
section 89;
"affiliate" means a shareholder
of a contractor or sub-contrac-
tor who owns fifty per cent or
more of the shares in the
business of the contractor or
sub-contractor or an entity
which controls, is controlled by
or is under common control with
the contractor or
sub-contractor;
"appraisal"means operations or
activities carried out following
a discovery of petroleum for the
purpose of delineating the
accumulations of petroleum to
which that discovery relates in
terms of thickness and lateral
extent and estimating the
quantity of recoverable
petroleum and all operations or
activities to resolve all
uncertainties required for
determination of commerciality
of a discovery;
"associated gas" means natural
gas produced from a well in
association with crude oil;
"authorisation" means the
approval granted by the Minister
to the Corporation to undertake
petroleum activities not in
association with a contractor;
"block" means an area that is
approximately six hundred and
eighty-five square kilometres as
depicted on the reference map
prepared by the Minister in
accordance with the provisions
of this Act;
"capital or financing lease"
means a lease that meets one or
more of the following criteria
(a)
the lease term is greater than
seventy-five per cent of the
economic life of the asset,
(b)
the lease contains an option to
purchase the asset for less than
the fair market value,
(e)
the ownership of the subject of
the lease is transferred to the
lessee at the end of the lease
term,
(d)
the present value of the lease
payments exceeds ninety percent
of the fair market value;
"commercial discovery" means the
requirement on the part of the
contractor to demonstrate to the
government that a discovery
would be sufficiently profitable
for both the contractor and the
Republic to merit development;
"Commission" means the Petroleum
Commission established by the
Petroleum Commission Act, 2011,
(Act 821);
"communities" includes people
living within the area where
petroleum activities are being
conducted and who are likely to
be affected by the petroleum
activities;
"contract area" means the area
covered by the petroleum
agreement in which a contractor
is authorised to explore for,
develop and produce petroleum
but excludes portions of the
area in respect of which a
contractor's rights are from
time to time relinquished or
surrendered;
"contractor" means a body
corporate which has entered into
a petroleum agreement with the
Republic and the Corporation
under this Act;
"Corporation means" the Ghana
National Petroleum Corporation;
"crude oil" means a mixture of
hydrocarbons which are liquid
under normal atrriospheric
conditions and includes
condensates and distillates
obtained from natural gas;
"decommissioning fund" means a
fund established under section
45 of this Act for the purposes
of funding decommissioning
activities upon termination of
petroleum activities in an area
under a relevant petroleum
agreement;
"development" means the
following activities carried out
in connection with a development
plan in the nature of the
building and installation of
facilities for production,
drilling of development wells,
construction and installation of
equipment, pipelines,
facilities, plants and systems,
in and outside the contract
area, which are required for
achieving production, treatment,
transport, storage and lifting
of petroleum and preliminary
production activities carried
out prior to the date of
commencement of commercial
production and all related
planning and administrative work
and the
construction and installation of
approved secondary and tertiary
recovery systems ;
"development period" means in
respect of each development and
production area, the period from
the dates of commercial
discovery until the date of
commencement of commercial
production;
"discovery" means finding within
a well at the end of drilling
during exploration operations,
one or more accumulations of
petroleum the existence of
which, until that finding, was
unproved by drilling, and which
can be or is recovered at the
surface in a flow measurable by
conventional international
petroleum industry testing
methods;
"exploration" includes the
search for petroleum by
geological, geophysical and
other methods and the drilling
of exploration wells and any
activity in connection with or
in preparation of and any
relevant processing and
appraisal work in the nature of
technical and economic
feasibility studies, that may be
carried out to determine whether
a discovery of petroleum
constitutes a commercial
discovery;
"exploration costs" means the
costs incurred in the search for
petroleum by geological,
geophysical and other methods,
drilling of exploration wells
and associated activities and
appraisal;
"exploration period" means the
period commencing on the
effective date and continuing
during the time within which the
contractor is authorized to
carry out exploration
operations;
"force majeure" means any event
beyond reasonable control of the
party claiming to be affected by
the event which has not been
brought about at the instance of
the party including, earthquake,
storm, flood, lightning or other
adverse weather conditions, war,
acts of terrorism, embargo,
blockade, riot or civil
disorder;
"Fund" means the Local Content
Fund established under section
64;
"gross production" means the
total amount of petroleum
produced and saved from a
development and production area
during production or testing
operations which is not used by
the contractor in petroleum
activities and is available for
distribution to the parties
according to the petroleum
agreement and the relevant
enactments;
"indigenous Ghanaian company"
means a company incorporated
under the Companies Act, 1963
(Act 179) which
(i) has at least fifty-one per
cent of its equity owned by a
citizen of Ghana; and
(ii) has Ghanaian citizens
holding at least eighty per-
cent of executive and senior
management positions and one
hundred per cent of the
non-managerial positions and
other positions;
"land" includes land beneath
water, seabed and the subsoil;
"licensee" means any person,
firm, body corporate or other
entity which has been granted a
reconnaissance licence or a
licence for transportation,
treatment or storage of
petroleum under this Act;
"Minister" means the Minister
responsible for Petroleum;
"mmscfd" means million standard
cubic feet a day;
"natural gas" includes
hydrocarbons which are gaseous
under normal atmospheric
conditions, and wet and dry gas;
"non-associated gas" means
natural gas produced from a well
other than in association with
crude oil;
"operator" means the company or
the Corporation carrying out the
petroleum activities on behalf
of the contractors or the
Corporation under a petroleum
agreement or of the
licensees under a licence, or
the Corporation where it
undertakes petroleum activities
under section 11(1);
"petroleum" means crude oil or
natural gas or a combination of
both;
"petroleum activity" means any
activity, engaged in within and
outside the country related to
the exploration for, development
and production of petroleum in
the nature of the acquisition of
data, drilling, plugging and
abandonment of wells, treatment,
storage, pipeline transportation
decommissioning and the
planning, design, construction,
installation, operation and use
of any facility for the purpose
of these activities;
"petroleum agreement" means an
agreement entered into between
the Republic, the Corporation
and a contractor under this Act
for the exploration, development
and production of petroleum;
"petroleum facility" means an
installation, a plant, or other
equipment for petroleum
activities, but does not include
supply or support vessels or
ships that transport petroleum
in bulk but comprises among
others a pipeline and a cable
unless otherwise provided;
"petroleum product" means a
product derived from petroleum
by a refining or treatment
process;
"petroleum resources" include
(a)
existing petroleum;
(b)
discovered petroleum reserves;
(c)
undiscovered petroleum reserves;
(d)
petroleum produced; and
(e)
petroleum under production;
"petroleum sub-contract" means a
contract between the Corporation
and a third party or between a
contractor and a third party for
the provision of goods and
services for petroleum
activities but does not include
a petroleum agreement;
"pollution damage" means damage
or loss caused by alteration of
the physical, thermal, chemical,
biological or radioactive
properties of any part of the
environment by discharging,
emitting or depositing
substances or wastes so as to
affect any beneficial use
adversely, cause a condition
which is hazardous or
potentially hazardous to public
health, safety or welfare, or to
animals, birds, wildlife, fish
or aquatic life, or to plants or
to cause a contravention of any
condition, limitation or
restriction which is subject to
a licence under this Act;
"production" means the recovery
and-disposal of petroleum
including any works and services
connected with the discovery or
disposal;
"production costs" means costs
incurred in the production of
petroleum;
"relevant agencies" means a
government entity of the
Republic under whose area of
competence petroleum activities
are conducted;
"royalty" means the entitlement
of the Republic to a portion of
petroleum produced and saved and
not utilized in petroleum
activities from each field and
which is calculated as a
percentage of gross daily
production rates without regard
to any prior deductions;
"small and medium enterprises"
means .an industry, project,
undertaking or economic activity
that employs not more than one
hundred persons with an asset
base that is not more than the
Ghana Cedi equivalent of two
million United States Dollars
excluding land or buildings;
"Standards Authority" means the
Authority established under the
Standards Authority Act, 1973 (NRCD
173);
"sub-contractor" means a third
party with whom the Corpora-
tion or a contractor has entered
into a petroleum contract for
the provision of goods and
services for petroleum
activities; and
"third party" includes an entity
other than the owner of the
shares of the incorporated
company at the time of the
execution of a relevant
petroleum agreement, affiliates,
sister and parent companies.
Transitional provisions
96. (1) Petroleum agreements
entered into before the
commencement of this Act remain
valid.
(2) A licensee, contractor,
sub-contractor, the Corporation
and any other person engaged in
a petroleum activity shall
comply with the relevant
provisions of this Act.
Repeal and savings
97. (1) The Petroleum
(Exploration and Production)
Act, 1984 (PNDCL 84) is hereby
repealed.
(2) Despite the repeal of PNDCL
84, the Regulations, rules
by-laws, notices, orders,
directions, appointments or any
act lawfully made or done under
the repealed enactment and in
force immediately before the
commencement of this Act shall
continue to have effect until
revoked, cancelled or
terminated.
Date of Gazette
notification: 19th August, 2016.
GPCLlASSEMBLY PRESS, ACCRA.
GPCLlA646/0811,SQ.O/2016
Website:
www. ghpublishingcompany.com
E-mail:
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