Petroleum (Exploration and Production) Act, 2016 (Act 919)

This Act applies to petroleum activities within Ghana, including activities on land, inland waters, territorial sea, the exclusive economic zone, and the continental shelf.

The Act’s object is to provide for safe, secure, sustainable, and efficient petroleum activities.

Petroleum in its natural state in the listed places in Ghana is property of the Republic of Ghana and is vested in the President in trust for the people of Ghana.

The Republic of Ghana must manage petroleum resources according to good governance, including transparency and accountability, and in line with the object of the Act.

Petroleum activities must be conducted only in an open area, under a licence or petroleum agreement, and in accordance with applicable enactments, subject to section 11.

The Minister must prepare a reference map of possible petroleum accumulation areas in Ghana, after consulting the Commission.

The Minister decides whether to open an area for petroleum activities, after evaluation and public reporting.

The Minister may close an area or redefine its boundaries, but must give public notice first and publish the final decision after 60 days.

The Minister may grant and extend petroleum reconnaissance licences, and a licence gives the licensed person a non-exclusive right to carry out specified reconnaissance activities in the licensed area.

Petroleum exploration, development, and production generally must be done under a petroleum agreement, with tender and publication rules and parliamentary approval for large borrowing.

The Corporation may do petroleum activities only with the Minister’s authorisation and terms, and its operations must follow permits and approved programmes.

A petroleum agreement must specify the area covered, and that area may include one or more blocks or parts of blocks.

The Minister must approve the operator before a petroleum agreement is executed, may approve a change of operator on request, and must appoint or change an operator in certain cases.

A petroleum agreement must not run for more than 25 years, unless subsection (2) applies.

A contractor or sub-contractor must not transfer shares in its incorporated company to a third party or affiliate without written approval when the transfer would give control or affect a 5%+ shareholder interest.

A contractor or licensee must not assign the contractor’s interest under a petroleum agreement, in whole or part, to a third party or affiliate without the Minister’s written approval.

Petroleum contractors and sub-contractors need Commission approval for certain subcontracting steps, and sub-contractors must register with the Commission.

A contractor selling all or part of an interest under a petroleum agreement must immediately tell the Minister, Commission, and Corporation the consideration and terms; the Corporation then has a pre-emption right and must notify the contractor within 90 days if it exercises that right.

The contractor must transfer certain petroleum assets to the Corporation when the Corporation chooses and the stated recovery or termination conditions are met.

The parties to a petroleum agreement may review its terms if there is a material change in circumstances. If that review causes a material change, Parliament must ratify the agreement under article 268.

This section limits the exploration period in a petroleum agreement to seven years, allows extensions in defined cases, and requires the contractor to notify the Commission in writing before moving to a later working period.

A contractor may ask to relinquish all or part of a contract area, and the Commission may approve it. If the contractor enters extension periods, the retained area must be reduced by at least 50% in the first extension and must not exceed 25% in the second or third extension, subject to the Minister’s limited power to require a smaller relinquishment area.

A petroleum agreement must include minimum work obligations and a minimum expenditure amount; if a contractor misses those obligations without an extension, the contractor must pay the Corporation, and the Minister may terminate the agreement.

A contractor must apply to the Commission for an exploration drilling permit, wait for the permit before drilling, comply with environmental requirements before exploration drilling, and must not change a well or field’s designation, status, or classification without written Commission approval.

A contractor must report petroleum discoveries, provide particulars, prepare appraisal documents if appraisal is needed, and relinquish the relevant area if the discovery is not commercial or not worth appraisal.

Contractors must carry out petroleum development and production to maximise long-term recovery, follow best international practice and sound economic principles, avoid waste and reservoir energy loss, and keep reviewing depletion strategy and technical solutions.

Contractors must submit a development and operation plan for commercial discoveries to the Minister, wait for approval before contracts or construction, and notify the Minister of deviations; the Minister can set deadlines and require changes.

The Minister may approve a development and operation plan only if several approval conditions are met; otherwise, the Minister must refuse approval and give written reasons.

The Minister may postpone development of a field if public or national interest requires, after consulting the contractor.

Petroleum production cannot start unless the Commission gives written approval.

A contractor may not produce or inject petroleum without an annual permit, and the Commission issues and can condition permits for production activity.

Associated natural gas may be used in petroleum activities if the contractor and the Corporation agree, after consulting the Commission, and if the use follows applicable laws, good petroleum industry practice, and approved production plans.

Flaring or venting petroleum is generally prohibited unless authorised; emergency flaring by a contractor is allowed only under the stated conditions.

The Minister may direct petroleum contractors to agree on unitised or coordinated development, and the agreement must be submitted for approval.

The Republic may try to reach agreement with another country when a petroleum accumulation extends across the border or continental shelf.

The Commission may direct third-party use of production facilities and approve, modify, or set use conditions and tariffs.

Contractors must measure and analyse petroleum using accepted industry practice and applicable enactments, and cannot change measurement methods or calibration without written Commission approval.

A person may not install, operate, or start installing and operating a petroleum facility without the required licence or permit, unless an existing development-plan right applies.

An applicant for a petroleum facility licence must include a facility description and approved scoping report, and must not start significant contracts or construction before the licence is granted.

The Minister can set licence conditions for petroleum facilities, appoint the operator, and later extend the licence.

The Minister may, after consulting the Commission and the contractor, decide how and where petroleum is delivered by the contractor and the Corporation.

Facility owners/operators must allow third-party access on fair, transparent, non-discriminatory terms, and agreements for use must be submitted to the Commission for approval.

Licensees or contractors operating a petroleum facility must submit a decommissioning plan to the Minister, and the Minister must seek the Commission’s advice.

The Minister may approve or disapprove a decommissioning plan. If approved, the Minister must set an implementation schedule; if disapproved, the Minister must notify the licensee or contractor in writing, give reasons, and request corrections or resubmission.

A licensee or contractor must establish a decommissioning fund as prescribed.

A contractor must immediately notify the Commission if it decides to abandon a well, then treat and plug the well and conduct prescribed surveys. Closure or plugging needs the Commission’s prior written approval.

A contractor, licensee, or the Corporation must restore affected areas and remove environmental damage or danger after petroleum activities end, following applicable enactments.

A contractor, licensee, or the Corporation may be liable for loss or damage linked to decommissioning in the situations stated here.

Petroleum activity participants must comply with the Act and related rules, and keep an appropriate management system in place.

People conducting petroleum activities must do so prudently and follow applicable laws, standards, best international practice, sound economic principles, and directions from the Minister, the Commission, and other relevant agencies.

The Commission may authorise inspections of petroleum activities, and affected persons must provide needed information and assistance when asked.

Petroleum data and related reports belong to the Republic, and specified licensees, contractors, subcontractors, the Corporation, and the Commission have limited use, disclosure, and marketing powers under this section.

Licensed parties and the Corporation must keep records in Ghana, may not export data or samples without the Commission’s written approval, must return exported materials on request, and must send analysis reports within 30 days if analysis happens outside the country.

Contractors and licensees must submit prescribed information to the Commission at intervals set by the Commission.

The Minister or Commission may require a person doing petroleum activities to provide relevant information, and the person must submit it to the named authority within the specified period.

The Commission must keep a petroleum register and make it open to the public.

A contractor or licensee may not mortgage a participating interest without the Minister’s written approval, may not do so for petroleum activities outside the country, must register any mortgage in the petroleum register, and the mortgage lapses if the facility is decommissioned.

A licensee, contractor, or sub-contractor must provide the Minister with performance bonds or guarantees if the Minister requires them.

Certain petroleum licensees and contractors must bear joint liability for obligations and indemnify the Republic and the Corporation, with a stated exception for taxes, cash royalties, and additional oil entitlement.

Certain petroleum-sector actors must hire qualified Ghanaian citizens, avoid discrimination, and prepare training plans for citizens with the Commission.

Licensees, contractors, sub-contractors, and similar entities must buy qualifying Ghanaian goods and use local service providers when the quality, availability, and price conditions are met.

The Commission must encourage and facilitate joint ventures, partnerships, and licensing agreements for technology transfer in the petroleum industry, where applicable.

Licensees, contractors, and sub-contractors must prepare and implement a local content plan and submit it to the Commission for approval.

This section establishes a Local Content Fund under the Act.

The Fund is meant to provide financial resources for citizens and indigenous Ghanaian companies engaged in petroleum activities.

The Fund may receive contractor and subcontractor contributions, money approved by Parliament, and grants. Fund money must be paid into a bank account opened by the Board with approval from the Controller and Accountant-General, and payments from the Fund must be signed by the specified officers.

The Fund is managed by the Minister and the Local Content Committee, and the Fund is exempt from tax.

The Local Content Committee must keep proper accounting records, the Commission must send the Fund’s accounts for audit within three months after year-end, and the Auditor-General must audit them and send a copy of the audit report to the Minister within three months of receiving the accounts.

The Commission must send an annual report to the Minister within one month after receiving the audit report, and the Minister must send that report to Parliament within one month after receiving it.

Certain contractors, sub-contractors, and licensees must set up a local company and keep local operating arrangements in place for petroleum activities, unless exempted by applicable enactments.

A contractor may export petroleum it is entitled to export, but must also sell a required percentage to the Republic at the prevailing market price; in war or other energy emergencies, the Minister may require supply of all or part of petroleum produced.

If petroleum activities are likely to affect local lawful interests or activities, the Corporation or Commission must negotiate the needed permission and the licensee, contractor, or Corporation must pay agreed compensation to affected persons.

Petroleum activities must be carried out with a high level of safety, and safety plans must be submitted to the Commission before the activities begin.

Licensees, contractors, sub-contractors, and the Corporation must identify workplace hazards, assess risks, protect exposed persons, and inform them about safety precautions.

People conducting petroleum activities must keep emergency preparedness in place at all times and take measures to reduce harm from accidents and emergencies.

Certain petroleum-sector actors must keep preventive security measures in place and have contingency plans against deliberate attacks.

Petroleum facilities and wells must be surrounded by a safety zone, and unauthorised entry into that zone is prohibited.

If an accident or emergency could cause or has caused serious harm, the licensee, contractor, sub-contractor, or Corporation must suspend petroleum activities as needed and tell the Minister and Commission within 48 hours.

If a licensee, contractor, sub-contractor, or the Corporation is not operating safely, the Commission may step in to protect safety and may recover its costs after giving reasonable notice.

The licensee, contractor, sub-contractor, and the Corporation must ensure that people engaged in petroleum activities have the required qualifications and competence.

People and petroleum operators must follow environmental principles and put safety, waste, pollution, and hazardous-waste tracking systems in place for petroleum activities.

A person must not carry out petroleum activities in an area unless the required environmental impact assessment has been done or the relevant environmental legal requirements have been complied with.

Certain petroleum actors are strictly liable for pollution damage, must remedy pollution, and may have to pay related costs if remedial measures are not taken on time.

If pollution damage arises, claims are first made against the operator; unpaid shares are borne by the other licensees or contractor parties; and the Minister assesses the damage and requires the liable person to pay compensation.

The contractor must pay royalty to the Republic for petroleum produced and saved, normally in kind unless the Minister directs cash payment.

A contractor must pay annual acreage fees to the Republic, and the Minister sets the amount unless a petroleum agreement provides otherwise.

Licensees, contractors, sub-contractors, and the Corporation must pay taxes, including petroleum income tax and capital gains tax, under applicable enactments.

A contractor must pay a bonus to the Republic if the bonus is prescribed.

The Republic is entitled to part of a contractor’s petroleum share from each field, calculated using the contractor’s after-tax inflation-adjusted rate of return.

A petroleum agreement must not affect a non-contractor’s right to explore for and produce non-petroleum natural resources if the grant does not unreasonably interfere with petroleum activities. That right includes scientific research.