Petroleum (Exploration, Development and Production) Act, 2013

The purpose of this Act is to implement the National Oil and Gas Policy of Uganda by creating a conducive environment for efficient management of Uganda's petroleum resources, promoting reconnaissance and exploration, evaluating discoveries, developing and producing petroleum resources, storing and transporting petroleum to delivery points, establishing institutions to manage and regulate petroleum activities, regulating licensing and cessation (decommissioning), ensuring public safety and environmental protection, supporting State participation and national content, and ensuring transparency and accountability in regulated activities.

Defines terms used in the Act (interpretation of key terms such as "Act", "Authority", "authorised officer", "best petroleum industry practices", "block", and others).

Licensees and other persons exercising functions under this Act must comply with environmental principles; licensees must ensure waste from petroleum activities is managed per environmental law, must contract a separate entity for waste management, and remain responsible for that entity. NEMA may license contractors and must make regulations; unlicensed management or non-compliance is an offence with specified penalties.

Petroleum property and control are vested in the Government, which shall hold petroleum rights on behalf of and for the benefit of the people of Uganda.

Petroleum activities in Uganda must not be carried out without an authorisation, licence, permit or approval; a person who contravenes this commits an offence and is liable on conviction to fines or imprisonment.

The Government may enter into agreements on petroleum activities; the Minister must develop model production-sharing or other model agreements and submit them to Cabinet and must lay approved models before Parliament.

For the purposes of this Act, the surface of the earth is deemed to be divided into graticular sections or blocks as set out in Schedule 3.

The Minister may open areas for petroleum activities but must first ensure evaluations, submit a report to Parliament, make a public announcement with impact assessments, allow up to ninety days for written views, and consider those views before declaring an area open.

The Minister may, in consultation with the Authority, consent to a licensee using a production licence as security for their share of the licence, subject to regulations and limited to the licensee’s share of future petroleum production revenue as provided in the agreement.

Licensees must not flare or vent petroleum beyond quantities needed for normal operational safety without Ministerial approval advised by the Authority; emergencies and safety or legal compliance needs are exceptions; breach may attract a fine up to five hundred thousand currency points.

Petroleum recovered in a development area may only be removed from that area in specified circumstances (for example, by a licensee with the Authority's written consent for sampling or analysis, or by a licensee according to licence conditions); contravention is an offence with fines and imprisonment.

The Authority may direct a licensee to take necessary steps to recover petroleum or to increase recovery rates, and a licensee must comply with directions given in writing.

The Minister may, in consultation with the Authority and the licensee, postpone petroleum development or production of a field.

Licences must agree on coordinating petroleum activities and apportionment when a reservoir spans multiple licence areas; if consensus is not reached within a reasonable time the Authority may determine joint activities and apportionment.

A licensee may enter into a written agreement with another person for unit development of a reservoir; the agreement must be submitted to the Authority for approval and entered within the period the Authority specifies.

A petroleum production licence must not prevent granting to a person other than the licensee the right to undertake exploration for and production of natural resources other than petroleum and to carry out scientific research, provided it does not unreasonably inconvenience the licensee's petroleum activities.

The Authority may, by notice in the Gazette, authorise named officers or officers by virtue of office to enter places where petroleum activities occur and inspect or take samples of petroleum for testing.

The licensee must submit to the Authority information about petroleum volumes and composition, use/injection/venting/flaring, and monitoring results and procedures.

The Authority must designate an officer to be responsible for testing petroleum samples taken under this Act or submitted by a licensee.

All tests of petroleum under this Act must be conducted with approved test apparatus in a manner prescribed by regulations.

An officer who conducts a test on petroleum must issue a certificate in the prescribed form.

The Minister must, in consultation with the Authority, approve the field development plan's production schedule and issue an annual production permit; the Minister also handles approvals for quantities, test production, production adjustments, and may require licensee reports.

Production of petroleum must maximize recovery, follow prudent technical and sound economic principles, avoid waste or loss of reservoir pressure, and licensees must continuously evaluate and improve production strategy and technology.

The Minister may, by regulation, set equipment, methods and standards for measuring petroleum produced, processed or transported, and may require multiple measurement points.

A licensee must use approved methods and practices acceptable to the Authority to store petroleum recovered from the relevant area in tanks, gasholders, pipes, pipelines or other receptacles constructed for that purpose.

A licensee must submit and, where applicable, update a decommissioning plan to the Authority; the Authority may require further information or amendments and the plan must be submitted no earlier than four years and no later than two years before expected permanent termination of use unless the Authority directs otherwise.

Establishes a decommissioning fund for each development area or related facility; the Authority must charge the licensee quarterly portions for estimated future decommissioning costs; licensee and, if applicable, facility owners must cover shortfalls; remaining funds accrue to the Government; fund managed by a committee as prescribed by regulations.

The licensee must notify the Authority of the time when a facility will be terminated if the facility's use is expected to end permanently before the licence expires.

The Authority may issue directions for disposal of decommissioned facilities, must set a time limit for implementing them, and several parties (licensee, owners, users) must carry out those directions unless the Authority directs otherwise; the Authority may act and recover costs if directions are not complied with.

The Minister must, by written notice served on the (former) licensee, direct that person within the notice period to remove property or make arrangements, plug and close wells, and provide for conservation; failure to comply is an offence liable to a fine not exceeding ten thousand currency points.

Subject to section 120 and ministerial approval, the Authority may remove, dispose of, sell property and deduct costs; such costs are debts due to the Government by owners or by persons who are or were licensees.

Persons obliged to implement disposal decisions, and licensees or owners who abandon facilities, are liable for damages or inconvenience from disposal or abandonment; multiple liable parties are joint and severally liable; the State may take over responsibility by agreement with financial compensation.

When the Government requires removal of a facility, any lien, charge or encumbrance on the facility shall lapse, but any right of use established with the consent of the Minister remains in force.

The Government may take over a licensee's facilities when the licence expires, is surrendered or cancelled, the licensee's costs have been fully recovered, or the facility’s use is permanently terminated.

The Minister may direct a licensee to deliver petroleum to cover Uganda requirements and may direct the recipient; the Minister may make regulations about when this applies; when the Minister directs deliveries the Minister must give the licensee forty five days notice; price is determined under section 123 plus transport costs.

The Minister may direct a licensee to place petroleum at the disposal of the State (with Cabinet approval) in war, threat of war, natural disaster or other extraordinary crisis; the Minister must determine price in specified situations and must report to Parliament within six months after performing such functions.

Pricing of petroleum must follow the method prescribed by regulations and must take into account international oil and gas prices.

Government may participate in petroleum activities through a participating interest; the Minister must, with Cabinet approval, specify the maximum Government share when announcing areas for exploration licences.

The licensee and its contractors/subcontractors must prefer Ugandan-produced goods and Ugandan-rendered services; ensure certain local entities are notified, have capacity, and are approved; use joint ventures with at least 48% Ugandan share when goods/services are not available locally; and the licensee must report achievements to the Authority within 60 days after each calendar year.

Licensees must submit, within 12 months of licence grant and on each anniversary, a detailed programme for recruitment and training of Ugandans to the Authority for approval and must submit an annual report on execution; programmes approved by the Authority may not be varied without the Authority's permission; "host communities" is defined.

Technology transfer required under subsection (2) is a shared responsibility between the Government and the licensee.

This Part governs liability for pollution damage from facilities affecting Uganda and allows the Minister, by agreement with a foreign State, to issue rules about liability for pollution damage from petroleum activities, without restricting compensation rights under this Act.

A licensee is strictly liable for pollution damage, regardless of fault.

If pollution damage happens during an unlicensed petroleum activity, the party who conducted the activity is liable for the damage regardless of fault; the same liability applies to others who took part and knew or should have known the activity was unlicensed.

Certain persons (contractors, equipment suppliers, rescuers, employees) are exempt from claims for pollution damage; a licensee may claim compensation from the polluter; a damaged party may sue the polluter if the licensee fails to pay court-ordered compensation.

A licensee must not claim compensation for pollution damage against a person exempted under section 132(2), unless that person or their servant acted willfully or negligently.

Legal action for compensation for pollution damage must be brought before a competent court in the area where the effluence or discharge of petroleum takes place or where damage is caused.

Licensees must not exercise rights under a licence in certain sensitive locations or without required written consents; they must consider community interests after obtaining consent; disputes are to be referred to the Minister within 15 days, and persons exercising licence rights must produce the licence on request.

Landowners in exploration or development areas may graze or cultivate the surface unless such use interferes with petroleum activities; in development areas they must not build without the licensee's written consent or, if unreasonably withheld, the Minister's written consent in consultation with the Authority; licence rights must be exercised reasonably.

A landowner or a licensee with a different licence (not under this Act) must retain rights of movement and other activities in an exploration or development area provided subsurface activities do not interfere with exclusive rights or petroleum activities in the area.

A holder of a petroleum production licence may obtain a lease or other rights for exclusive use of land in a development area, subject to section 135 and other land acquisition law, and an expert referred in subsection (2) shall determine values.

A licensee must pay a land owner fair and reasonable compensation for disturbance of rights and surface damage from petroleum activities on demand; claims must be made within four years.

A licensee must carry out petroleum activities safely, identify and evaluate hazards and risks from work under the licence, and, so far as reasonably practicable, prevent exposure of workers to those hazards.

An operator must take necessary precautions to protect people at or near installations, protect the environment (including preventing pollution), and inform relevant persons of those precautions.

Licensees and any other participants in petroleum activities must at all times maintain effective emergency preparedness; the licensee must ensure measures to prevent or reduce harmful effects and, to the extent possible, restore the environment; the Minister may issue directions to implement those measures.

The licensee must implement and maintain security measures and contingency plans, make facilities available for emergency drills and participate when necessary; the Minister may direct implementation of those measures.

The Authority may direct safety zones around petroleum facilities; it may establish or extend them in accidents/emergencies; the Authority determines their extent and must consult the Minister if a zone crosses a border; persons must not carry out unauthorized activity in safety zones.

If an accident or emergency in section 143 occurs, the licensee or other responsible person must suspend petroleum activities as necessary; the Minister may order suspension or impose conditions in special circumstances and may extend or mitigate licence obligations where an order is based on circumstances not caused by the licensee and upon application.

Licensees and other persons engaged in petroleum activities must have the necessary qualifications; the licensee must ensure workers comply with that requirement.

If a serious accident occurs in petroleum activities, the Minister may appoint a commission of inquiry under the Commissions of Inquiry Act to inquire into the accident.

Requires licensees to submit and retain petroleum data and related records, provide copies to the Authority free of charge, prohibits export of samples without written Authority authorisation, requires disclosure of evaluation technology to Government, and requires the Minister to establish a national data bank.

A licensee must keep complete and accurate records at an address in Uganda notified to the Authority.

When a licence ends (terminated, revoked or expires), the person who was the licensee immediately before that event must immediately deliver specified records, plans, tapes and other documents to the Authority in a format acceptable to the Authority.

The Minister may, under the Access to Information Act, make available to the public specified details about agreements, licences, exemptions, field development plans and assignments.

Data submitted to the Minister by a licensee must be kept confidential and may not be reproduced or disclosed by any party under this Act, subject to specified exceptions including disclosure by the Minister (with 15 days prior written notice) and disclosures by the licensee or its subsidiaries with prior written consent.

Public servants and specified Authority members must not disclose information obtained in the course of employment for ten years; contravening the section is an offence punishable by a fine up to five hundred currency points or imprisonment up to five years or both.

Licensees must pay royalty to the Government on petroleum recovered at the delivery point; the Authority may prohibit removal of petroleum for unpaid royalty and must prepare an annual statement of certificate values.

The holder of a petroleum exploration or production licence must pay annual fees for the licence as prescribed by regulations.

When granted a petroleum exploration or production licence, the licensee must pay the Government a signature bonus as may be prescribed by regulations.

Payments due to Government under this Act must be in an international and freely convertible currency.

If a person fails to pay when due under this Act, the person must pay a penalty: a surcharge of five percent of the amount in default for each day of default.

Payments under this Act are a debt due to the Government and may be recovered in accordance with the Income Tax Act.

A person must not, without reasonable excuse, obstruct, molest or hinder an authorised officer in the exercise of powers under the Act, or knowingly or recklessly provide a false or misleading statement or document to an authorised officer carrying out duties under the Act.

A person must not, without reasonable excuse, obstruct, molest, hinder or prevent a licensee from performing activities authorised by the Act or the licence; doing so is an offence punishable by a fine up to one thousand currency points, or up to five years imprisonment, or both.

Public service officers engaged in implementing the Act must not, in their private capacity, knowingly acquire, attempt to acquire or hold specified petroleum-related or supplier interests.

If an offence by a company is proved to have been committed with the consent, connivance or neglect of a director or similar officer (or a person acting as such), both that officer and the company commit the offence and can be prosecuted; an individual so convicted may face imprisonment in substitution for or in addition to any fine, with imprisonment calculated on the basis that two currency points equal one month.

When a person is convicted under this Act, the court may order forfeiture of items or petroleum and may order payment to the Government (proceeds of sale, wellhead value, or part thereof); the court may set aside unenforceable orders on application and may require notice and hear persons before making an order.

A person who, without reasonable excuse, contravenes any directive issued under this Act commits an offence and on conviction an individual may be fined up to two hundred thousand currency points or imprisoned for up to ten years or both; a body corporate may be fined up to five hundred thousand currency points.

It is an offence for a person to place or be accessory to placing petroleum or another substance with the intention of misleading others about the existence of a reservoir; penalties apply on conviction.

A person needing spare capacity in another party's facility has a right to use it on objective, non‑discriminatory terms; negotiations between owner and user must be conducted in good faith; parties must exchange updated information during negotiations; licensees must participate on the side of their greatest economic interest; the Authority may set or amend tariffs and may direct use of facilities for efficiency or public benefit.

The licensee must maintain a Uganda-registered company capable of independently managing petroleum activities subject to Ugandan jurisdiction; the licensee must ensure trade union activities among its employees and contractor personnel; the Authority has power to direct the licensee to use designated bases subject to the Authority's prescriptions.

The Authority must carry out regulatory supervision to ensure compliance by persons conducting petroleum activities; the Minister may issue orders necessary for implementation.

The Authority may direct a licensee to survey specified wells or facilities and to submit a written report; the Authority can require further information, cause surveys if the licensee fails, and costs are recoverable as a debt; failure to comply is an offence punishable by fine up to one hundred currency points or imprisonment up to one year or both.

A licensee must keep license-area structures, equipment and other property used in its operations in good repair and remove items not used or intended for use; items not brought in by or with the authority of the licensee are excepted; contravention is an offence punishable by a fine up to two thousand currency points.

The Minister may consent to a licensee arranging for an affiliated company or parent to carry out the licensee's activities, subject to reasons and a condition protecting tax revenues.

The Minister must require an applicant to provide security (a bond or other form) for licence conditions and to take insurance against petroleum-related liabilities.

Parties who jointly hold a licence are jointly and severally responsible to the State for financial and other obligations arising from petroleum activities under the licence.

If a person acting for a licensee incurs liability to a third party, the licensee is liable for damages to the same extent as that third party.

The Minister may, by written notice when satisfied a person has petroleum-related information, require that person to provide information or data, attend and answer questions, or hand over information; persons cannot refuse on grounds of self-incrimination; information given is inadmissible except in proceedings for an offence under this section; refusal or providing false information are offences.

Authorised officers have powers to order written directions and restrictions, suspend petroleum activities, withdraw persons from structures and discontinue unsafe equipment; they must identify themselves before exercising powers; aggrieved persons may appeal to the Minister who must decide and may rescind, affirm or substitute the decision.

The Minister may issue a certificate stating certain facts about licences, licensees, conditions, consents or directions, and that certificate is admissible as evidence subject to rebuttal.

The Authority may, with the Minister's approval and by written instrument, consent to persons carrying on geoscientific investigations in Uganda; an authorised officer may enter land in Uganda and carry on scientific investigations to collect information on geology and petroleum resources.

Specifies permitted methods for serving documents or notices on persons and on the Authority, and defines the principal office for foreign corporations.

A licensee must at all times keep the Government indemnified against all actions, claims and demands arising from acts done in exercising or purporting to exercise the licensee's rights under this Act or the licence.

A licensee must allow pipelines, cables, wires or other facilities to be placed on, in or above the licensed area.

The Minister may make regulations for administering the Act and on many specified subjects; regulations may prescribe penalties; and the Minister must make regulations to protect cultural and historical heritage sites in areas of petroleum activity.

The Minister may issue codes of practice.

The Minister may amend Schedule 1 with the approval of Cabinet by statutory instrument; the Minister may, by statutory instrument, amend Schedule 2 and Schedule 3.

This Act takes precedence over prior Acts relating to petroleum activities in Uganda and its provisions prevail over any other written law in case of conflict, subject to the Constitution, the National Environment Act and the Access to Information Act, 2005.

The Authority must direct a licensee to comply when it is satisfied the licensee is contravening a licence condition or requirement, must send a directive to the licensee and directly affected parties containing specified information, must consider representations before notifying, and may uphold, vary or withdraw the order of compliance.

If a licensee fails to meet licence conditions because of force majeure, the licensee must immediately notify the Minister with particulars of the failure and its cause.

The Petroleum Exploration and Production Act, Cap. 150 is repealed, and statutory instruments made under it that are in force immediately before this Act commence remain in force so far as not inconsistent until revoked and are deemed made under this Act.

Licences and permits under the repealed Petroleum Exploration and Production Act (Cap. 150) that were in force immediately before this Act’s commencement continue in force from commencement as if granted under this Act, and time-limited licences/permits remain in force for the portion of their period after commencement; terms and conditions (including rights and obligations) in force immediately before commencement must not be less favourable than those that applied immediately before commencement.

The office of the Commissioner and other officers in existence immediately before the commencement of this Act are continued in existence, subject to this Act.