Ghana passes new petroleum E & P Law

Ghana’s petroleum sector is set to pass a new Exploration and Production (E&P) Bill into law.


The E&P Law 2016 replaces the E&P Law, 1986 (PNDCL 84) which has governed the petroleum sector in Ghana and opens new chapters in the governance of the sector.

oilGhana commenced commercial oil production in December 2010 after discoveries on the Jubilee field in 2007.

But the old law has remained in force amidst new developments in the sector that need new governance structures.

The law seeks to address key issues in the sector to ensure that the upstream petroleum industry is governed according to the tenets of international best practice to meet the growth and development aspirations of the people of Ghana.

“The Bill creates an attractive environment for potential investors to participate in the sector by providing certainty and transparency in the ground rules for operations. Open, transparent and competitive public tender processes have been introduced to precede the entering of a petroleum agreement,” said a statement signed by Edward Abambire Bawa, Head of Communications at the Petroleum Ministry.

Among other provisions, the new law creates an attractive environment for potential investors to participate in the sector by providing certainty and transparency in the ground rules for operations.

Although this process exists under PNDCL 84, the new law has further expanded it to include the requirement for the Minister to publish an invitation to tender or an invitation for direct negotiations in the gazette and at least two state-owned national newspapers or any other medium of public communication.

In order to deepen transparency in the sector, the Petroleum Commission is mandated by the new law to establish and maintain a Petroleum Register of petroleum agreement, licenses, permits and authorizations which shall be open to the public.

On Local Content, the new law imposes an obligation on persons carrying out petroleum activities to ensure that Ghanaian citizens with the requisite qualifications in categories and functions as prescribed are employed.

These contractors are also to prepare and implement training programs for Ghanaian citizens in all aspects of petroleum activities.

Petroleum contractors are also required to acquire materials, equipment and consumer goods produced or provided for in the country by an indigenous Ghanaian company of similar quality and cost to foreign material or goods.

“They are also required to contract local service providers to the extent that the services they provide are similar to those available on the international market,” the law stated.

In a comment, the Ministry of Petroleum said there was no doubt that this new law would have a positive impact on Ghana’s economy, as the sector would become a significant source of revenue for Ghana in the form of royalties, income and capital gains tax, participating interest and bonuses.

The provisions of the Bill, according to the ministry, seek to consolidate these sources of revenue into law rather than leave them to be a subject of negotiation in petroleum agreements.

“Revenue so derived will support the nation’s industrialization and growth strategies, whilst creating jobs for Ghanaians, thereby contributing significantly towards the alleviation of poverty in Ghana,” it added. Enditem

Source: Xinhua/News Ghana

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