Ghana’s Parliament has passed the Petroleum (Exploration and Production) Bill, 2016 into Law.
The object of the Act is to provide for and ensure safe, secure, sustainable and efficient petroleum activities in the country.
This is to achieve optimal long-term petroleum resources exploitation and utilisation for the benefit and welfare of the people of Ghana.
The Petroleum (Exploration and Production) Act, 2016 further seeks to provide an enabling environment for increased private participation and investment in the sector firstly by the entry into the sector by contractors through an open, transparent and competitive process and also by providing clarity in the ground rules for operators.
The passage of the Bill into Law will repeal the Petroleum (Exploration and Production) Act, 1984 (PNDCL 84).
The new Act applies to petroleum activities within the jurisdiction of the Republic of Ghana, including activities in, under and upon its territorial land, inland waters, territorial sea, exclusive economic zone and its continental shelf.
Prior to the passage of the Bill, the Chairman of the Committee, Amadu Sorogho in presenting the ‘Report of the Committee on Mines and Energy of Parliament on the Petroleum (Exploration and Production) Bill, 2016, explained that the Petroleum (Exploration and Production) Bill, 2014 was laid in Parliament on Tuesday, the 11th of November, 2014, but after due consideration of the Bill, the Committee proposed several amendments to strengthen the provisions in the Bill.
The Chairman added that this prompted meetings between the Ministry of Petroleum, the Leadership of the House and the Committee to withdraw the Bill to incorporate the amendments proposed to facilitate the passage of the Bill.
He further indicated that the Bill was accordingly withdrawn by the Minister for Petroleum, Emmanuel Armah-Kofi Buah on Friday, the 3rd of June, 2016 and replaced with a new Bill, Petroleum (Exploration and Production) Bill, 2016 for its consideration and passage.
The establishment of the Petroleum Commission, pursuant to the Petroleum Commission Act, 2011 (Act 821) to regulate and manage the utilisation of Ghana’s petroleum resources was a first step towards the strengthening of the legal and regulatory framework.
This new Act is a further step towards the realisation of this important goal and will firmly equip the Commission with the comprehensive legislation required to enable it effectively implement its constitutional mandate.
The challenges in the oil industry are enormous and touch on the everyday lives of Ghanaians both directly and indirectly.
They include financial matters which if not adequately provided for may eventually lead to a loss of the country’s beneficial interests and control over the country’s resources.
They also include matters of health and safety which can cause unnecessary loss of lives and human resources if appropriate measures are not instituted and implemented; stricter decommissioning requirements necessary to ensure the preservation of the environment; local content and local participation in the industry to achieve full indigenous participation, gainful employment and benefit to Ghanaians in all aspects of the industry.
This is to also ensure internationally accepted operation standards and stricter penalties that are designed to discourage and prohibit abuse.
While Provisional National Defence Council Law 1984 (PNDCL 84) makes provision for some of the above-said matters, it does not do so extensively, nor does it provide for the much-needed incentive for investment to achieve sustained interest in the industry by both local and foreign investors. The new Act therefore expantiates on these principles and provides further clarity.
It is worth noting that the new Act improves the existing legal framework. For instance, extensive provisions are introduced to deal with safety requirements and standards, safety precautions, emergency preparedness and safety zones.
The Act also ensures that Contractors are further required to give effect to environmental principles prescribed by the Environmental Protection Agency Act, 1994 (Act 490) and related Regulations and not just Regulations made on the strength of PNDCL 84, as indicated in section 28 (1) of PNDCL 84 with respect to restoring affected lands at the end of petroleum activities in an area.
The key issue of decommissioning is therefore dealt with in the new Act and participants in the industry are to be held strictly liable for any pollution damage resulting from their conduct of petroleum activities.
The new Act also improves on the fiscal regime by not merely introducing the collection of new fiscal elements such as bonus payments but more importantly providing for matters such as rate of royalty and annual acreage fees to be fixed in regulations and not left to be negotiated in petroleum agreements.
It should be noted that other legislations which govern the petroleum industry include the Petroleum Revenue Management Act, 2011 (Act 815), the Ghana Shipping Act, 2003 (Act 645) and the Ghana Maritime Security Act, 2004 (Act 675).
The provisions in the new Act complement the object and functions of the Commission as regulator for the petroleum upstream subsector and provide a comprehensive piece of legislation for the Commission to effectively manage Ghana’s petroleum resources for present and future generations.
Prior to the passage of the Bill into Law, the afore-discussed memorandum was presented on the floor of Parliament.