Companies have rigid timelines/guidelines for oil exploration

Oct 17, 2023 News

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Petroleum Activities Law Pt. 3

By Kiana Wilburg

INTRODUCTION

Kaieteur News – Guyana’s Petroleum Activities Law provides a comprehensive outline of timelines/guidelines for companies interested in exploring for petroleum in designated areas. The legislation outlines the process of obtaining a licence for petroleum exploration as well as the fundamental details one can expect in that document.

In simpler terms, if a company is looking to explore petroleum in a specific area, they need to apply for a special permit, known as the petroleum exploration licence. This licence, granted by the Minister of Natural Resources, sets the rules for exploration, including how long the company can explore, under what conditions, and what happens after a discovery.

Today’s third installment, places the spotlight on these provisions companies must follow in order to be complaint.

APPLYING FOR AN EXPLORATION LICENCE

The Petroleum Activities Law states that a company may make an application to the minister for a petroleum exploration licence subject to the payment of such fees prescribed by subsidiary legislation. The conditions specified in a petroleum exploration licence or a petroleum agreement would then confers on the licensee, the exclusive right to carry on exploration operations in the area to which the licence relates.

A petroleum exploration licence shall state a number of details as follows:

– the date of the grant of the licence

– the area to which the licence relates

– the conditions subject to which the licence is granted, including those conditions which are necessary to give effect to any petroleum agreement entered into by the Minister and the applicant for the licence; and

– the minimum exploration work commitments and spending obligations agreed in the licence or petroleuin agreement

Notwithstanding the above, the law states that a petroleum exploration licence may contain provisions on other matters as the minister may determine for the purposes of the Act. Such provisions can speak to the right of the State to exercise an option to acquire, on prescribed terms and conditions, or on terms to be agreed in the future, an interest in a petroleum production licence.

Furthermore, the law states that a petroleum exploration licence shall specify the term or life of the licence and may provide for an additional non-renewable preparatory period, not exceeding six months, to enable the licensee to make the necessary preparations to carry out the exploration operations authorized by the licence.

Where a preparatory period is provided for in a petroleum exploration licence, the law states that the term of the licence shall commence on the date immediately following the expiration of that preparatory period. Additionally, the law gives the minister the power to  prescribe by subsidiary legislation, the maximum term for a petroleum exploration licence and any renewals.

Furthermore, the law states that if a company makes an application for the grant of a renewal of the petroleum exploration licence before the expiry date, it shall continue to be in force until a final decision is made by the minister.

Additionally, the law states that if an exploration licence ceases to be in force as a result of being expired but there has been an oil discovery, then the licence remains in effect. It shall also continue to be in force until the minister decides on a proposed appraisal programme, an application by the licensee for the retention of the discovery, or an application for the extension of time to declare commerciality and make an application for a production licence.

Where an application for retention of the discovery submitted by the licensee is approved by the Minister, the law states that the petroleum exploration licence relating to the discovery area that would otherwise cease to be in force shall, unless sooner determined by surrender or cancellation under this Act will continue in force in respect of the discovery area until the expiry of the retention period prescribed in the licence or petroleum agreement.

CONCLUSION

Given the foregoing provisions, it is clear that the Petroleum Activities Law ensures both the company and the state have a clear understanding of the rights and responsibilities associated with petroleum exploration. It sets out the requirements for getting a licence, the conditions under which exploration can take place, and the process following a discovery. It is crucial for companies to be aware of these provisions to ensure they comply fully, and for the general public to understand the checks and balances in place to ensure responsible exploration.

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• Exploration, guidelines, Minister of Natural Resources, petroleum, Petroleum Activities Law

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