Petroleum (Exploration and Production) Act, 1985 (No. 13 of 1985)

1. Shmt tit.le ::!. Jntcrprctation :1. Ti1Jt. to petroleum PART II PTGTROLJ<illl\1 COMMITTEE 4. l◄:stablis11ment of Committee and functions ti. Composition of Committee Ii. 'I.'cnnre of office R. .Proceedings of Committee \1. Rceretary .i c,. Di:,wlosme of interest JL liu III rmity of lll<'m bers P.u::r Ill AD !ll JNISTRA-rION

12. Administration of Ar,t I a. Delegation of ::\Iinister's powers

14. Petroleum rcgi,,,ter

15. Inspection of register 16. lnfonnaLion of eon tracts to be submitted to Provincial Council1:.1 Su,gfo copies of this Act mo;u lrn ubt,iine,d from the GovernrnPnt Prir.t<!r, /'.O. JJo.c :iul:1G. l.uu,k,,. Ptice .Kl.()On. No. 13 of 1985] Petroleum (Exploration and Production) PART IV GRANT OF RIOlITS·TO CONDUCT PETROLEUM: OPERA'rIONS Section

17. Right to conduct petroleum operations

18. Authority to contract

19. State participation

20. Qualificat10ns to contrnei

21. Prohibitions

22. Bids

23. Blocks PART V Tn'.1<; ANH NATURE OF CoNTRAcTs

24. Conditions of contract

25. Contents of contract

26. Obligations of cont,ractor

27. 'ferm of contract,

28. Relinquishment

29. 'l'ransfors and assignments

30. Termination

31. Duty to inrlemnify

32. Conservation and work practices PART VI AREAS 01' 01'ERA'l'ION AND 8URJi'ACM RHUI'l'S

33. Areas closed t,o petroleum operations

34 .Restricted areas

35. Surface right;s and compensa,ticm :16. Otlwr minen1!s Petroleum (Exploration (No. 13 of 1985 a,nd Production) PART VII GOVERNMENT REVENUES Section

37. Income Tax

38. Employee taxation

39. Royalty or production payment

40. Surfa00 rentals

41. Other foes, charges and levieE-

42. Exemptions PART VIII GENERAL PRO\"lS\ONS 4a. Immunity of public olli(:cn, -l -L Pmhibition of publi<'.a( ion or di~f'losure of information t.o unauthorised per:so11s -It;, IJi:,;putns hctweun ;-;t,atP ,ulll ,·,111tra.ctor -lU. Dispt1h'S between c·ontrndor 1111<1 others 47. ltevo<,ntion ·48. · Effect of revocation -19. Penalty .-,o. Heguln1ion-; :; ! . :'\n11-applid1i1111 of 1 hn \Iin<•,: ,rnd :\Tinnrab .\ct P eJrol,eutr, (Jilxplom,ti011, [No. 13 of 1985 and Production) GOVERNMENT OF ZAMBIA ACT No. 13 of 1985 Date of Assent: 2nd April, 1985 Ar Act to regulate petroleum e:xplo:ration, development and production in Zambia; to provide for title to and control of petroleum in Zambia; to provide for the establishment of a Petroleum Committee; to define the functions and powers of the Committee; to regulate contracts relatin~ to petroleum operations; and to pro- vide for matters connected with or incidental to the foregoing. [ 12th April. 1985 ENACTED by the Parliament of Zambia. Enactment PART I PRELIMINARY

1. This Act may be cited as the Petroleum (Exploration Short title and Production) Act, 1985.

2. In this Act, unless the context otherwise requires- Interpreta- tion " Chairman" weans the person designated Chairman of the Committee by section .five; " Commercial discovery " means a discovery of petroleum which can be exploited commercially in accordance with accepted practices in the international petroleum industry; " Committee " means the Petroleum Committee esta- blished by section/our; "Contract" means any agreement between the State and a contractor entered into pursuant. to this Act for the conduct of petroleum operations in the Republic; " Contractor " means any person with whom the State enters into a contract; and includes his agents, re- presentatives and assignees; " Contract Area " means a geographical area which is covered by a contract; and includes tho whole of, or such part or parts of, the original area c1warded to a contractor as shall remain at the disposal of such contractor from time to time pursuant to the terms of the contract; " Crude oil" means petroleum which is in liquid state at the well head or gas/oil separator or which is extracted from natural gas, including any distillate or condensate: " Development and production period " shall be construed in accordance with section twenty-seven; " Exploration period " shall b;, eonstrued iH rtecordance with section twenty-stven; " Member " means a member of the Committee; " Minerals " shall have the meaning assigned theret.o in Cap. 329 the Mines and :Minerals Act; but shall not include petroleum; "Natural gas" means all petroleum which at atmospheric conditions of temperature and pressure is in a gaseous state; and includes wet mineral gas, dry mineral gas, wet gas and residue gas remaining after the extraction, processing or separation of liquid petroleum from wet gas, as well as non-petroleum gas or gases produced in association with liquid or gaseous petroleum; '' Petroleum " means all natural organic substances compo- sed of carbon and hydrogen; and includes crude oil ancl natural gas, and all_ other mineral substances, products, by-products and derivatives that are found in conjunction with petroleum; "Petroleum operations" means the operations related to the exploration, development, extraction, production, field separation, transportation, storage, sale or disposal of petroleum; but does not include any transportation or other operations- (i) beyond the point of export; or (ii) in the case of petroleum whieh is processed within Zambia, beyond the point of entry into a refinery or liquefaction or natural gas trelltrnent plant; " Register " means the petroleum register maintained pursuant to section Jourteen of this Act; "Vice-Chairman " means the person designa,ted Vice- Chairman of the Committee by section five. Title to 3. (l) The entire property in and control over all petroleum pot:roleum and accompanying substitnccs, in whafover phyBic:al state, located on or under the territory of the Republie i~i vested exclusively in the Preside11t on behalf of the fitatt•. (2) Notwithstanding the provis10ns of subsection (1), a contract may provide for a person tc acquire property in, title to or control over any petroleum within. the Republic. (3) 'rhc provisions of snbsections (1) and (2) shall have effect notwithstanding any rights which any other person may possess in or over the soil on or under which petroleum is discovered. PART II I'ICTiiOLEUM COMMITTEE Establish-

4. There is hereby established the Petroleum Committee ment of which shall be responsible for the formulation of policies ColllDlltt.ee relating to petroleum and its development in Zambia and shall and functions perform such other functions as are provided for under this Act

5. 'rhe Committee shall consist of the following members: Composition of (a) t,hE, Minister responsible for mines, whn shall be Committee Chairman; (b) four Ministers appointed by the President, one of whom shall be designated Vice-Chairman; (c) the Governor of the Bank of Zambia or in his absence the Deputy Governor; (d) not more than three other persons who shall be appointed by the President on such terms and con- ditions as he may think fit.

6. (I) A member appointed under p11ragraph (d) of section Tenure of offico five shall hold office for a period of three years from the date of his appointment and may be re-appointed upon the expiration of imch form. (2) _\ member referred to in subsection (1) may resign upon gi\·ing one month's notice in writing to the President and may be remornd by the President at any time.

7. (1) A member shall vacato his oflice if he is absent from VaoMJciea two consecutive rncetings or'the Committee without reasonable cause. (2) ,vhenever the office of a member becomes vaoant before the expiry of the term specified in section six, the President may ,t appoint, anotlwr person to be member: ProYided tliat sueh other person Hhall h(~ld office only for tho unexpired tern1 of the person wlrn Yacatcs such oflfoe. Proceedings 8. (1) Subject to the other provisions of this Act, the of Commit toe Committee may regula,te its own procedure. (2) The Committee sludl meet, as often as is neccssa,ry to carry out its functions, at such places and at such times as the Chairman may decide. (3) Upon giving notice of not less than five days, a meeting of the Committee may be called by the Chairman and shall be called if not less than five members so request in writing: Provided that if the urgency of a,ny particufar 1,HJ,UC'r does not permit the giving of such notice, a special meeting may be called upon giving shorter notice. (4) Five members shall form a quorum at any meeting of the Committee. (5) There shall preside at any meeting of the Committee- (a) the Chairman; or (b) in the absence of the ChaimaH, the Vice-Chainuan; or (c) in the absence of the Clrn.irrn::in and the Vice-Chairman, such member as the members present may elect for the purposes of that meeting. (6) A decision of the Committee on any q11estion shall be by a majority of the members present and voting at the meeting and, in the event of au equality of votes, the person presiding t.t the meeting shall have a casting vote in addition to his deliberative vote. (7) The Committee may invite any person, whose presence is in its opinion desirable, to attend and to participate in the deliberations of a meeting of the Committee but such person shall have no vote. (8) The validity of any proceedings, act or decision of the Committee shall not be affected by any vacancy in the member- ship of the Committee or by any defect in the appointment of any member or by reason that any person not entitled so to do took part in the proceedings. (9) The Committee shall cause minutes to be kept of the proceedings of every meeting of the Committee. Secretary 9. (1) The Permanent Secretary in the Ministry responsible for mines shall be the Secretary to the Committee. (2) The Secretary shall be n,,pousible for the day to day affairs of the Committee m1der the general supervision of the Chairman.

10. (1) If a member is present at a meeting of the Committee Disclosure of interest at which any matter is the subject of consideration and in which matter the member or his spouse is directly or indirectly interested in a private capacity, he shall, as soon as practicable after the commencement of the meeting, disclose such interest and shall not, unless the Committee otherwise directs, take part in any consideration or discussion of, or vote on, any question touching such matter. (2) A disclosure of interest made under this section shall be recorded in the minutes of the meeting at which it is made.

11. No action or other proceedings shall lie or be instituted Immunity of members against any member for or in respect 0f any act or thing done or omitted to be done in good faith in the exercise or purported exercise of his functions under this Act. PART III ADMINISTRATION

12. Subject to the provisions of section four the Minister Adminis- tration of shall be responsible for the administration of this Act. Act

13. 'l'he :Minister may delegate to any public officer any Delegation of of his functions under this Act: Minister's powers Provided that the Minister shall not delegate his power bo enter into and terminate or revoke any contract.

14. ( 1) The Minister shall cause to be maintained a register Petroleum register which shall contain the following information: (a) in respect of each contract entered into, the names of all persons with whom the contract is made, the names of any assignee of any rights under such contract and a brief description of the duration 9f the exploration period, and of the contract area for such contract; (b) copies of all instruments of approval of contracts entered into pursuant to subsection (I) of section eighteen of this Act; (c) the contractor's office address in the Republic and the name of its resident representative along with a copy of the powers of attorney establishing such representative's authority to act on behalf of the contractor; (d) instruments evidencing the termination, revocation. or expiration of contracts; (e} a map of the Republic illmitrating those areas cmrrently under contract and these which remain available for award in accord.an cc with this Act; d) instruments evidencing- (i) the nature and extent of any areas relinquished or surrendered by a contractor; (ii) the establishment of a commercial discovery of petroleum, the date of declar0,tion thereof, the delimitation of the areas involved and the duration of the development and production period; and (iii) the grant of extensiorl8 to the exploratior ~eriod pursuant to the termu of the ()Ontract,, and (g) such other information as the l\Iinister ma,y determine. (2) Registration shall not cure any defect in any document registered or confer upon it' any effect or validity which it Wl)uld not otherwise have had. Inspection 15. The Minister shall, on application and upon payment of of the prescribed fee, allow inspection of the register at all register reasonable times and shall, upon request, give copies or extracts from any entry in such register. Information 16. 'rhe Minister shall forward, in such form 11,nd manner of as he may determine, details of every contract and of any contracts to be instrument transferring, approving or terminating any contract submitted or any interest therein, as may he entered in the register, to to Provincial the Provincial Council in whose area. the contract area in Uouncils question is situated. PART IV GR.A.N'.I.' OF RIGHTS TO CONDUOT PETROLEUM OPERATIONS Right to 17. (1) The State reserves the right to carry out petrolemu conduct petroleum operations either on its own or by means of contracts with operations any qualified person. (2) No petroleum operations shall be conducted in the Republic by any person other than the State unless such person has entered into a contra<.it in accordance with this Act. Anthorit. 18. Snbject to the other provisions of this Act, the Minister t;o <Joutract may issue invitations for bids and, following the approval of tho Committee as to his selection of hidders for negotiations, may conduct negoti_ations and enter into contraets: Provided that- (i) such contrn,cts shall not become effective until the written approval thereto of the C01TI mittee is obtained; ,UHJ. (ii) the terms a,nd conditiurn, embodied in such contracts r;haH not be contrary to or inconsistent with the provisions of this Act.

19. 'fhe :\linister ma,y, with the approval of the Committee, ~tato provide frir the State's participation, djrectly or indirectly, in partici- pation ,-ome or 1111 stages of the petroleum operationP and such parti-. cipation IMty include the right to partir.ipato in t.he rights and obligations set out in a contract.

20. (1) A contract shall only be entered into with persons (Jualifi. who demonstrate a proven itbilit,y t.o contribute the necessary nations t:O funds, assets, machinery, equipment, tools and technical contract expertise necessary for the <ilffective performance of the tMms and conditions of the proposed contract. (2) ]?or the purpose of establishing the ability of a particular person as described in subsection (1 ), the Minister may require the submission of documentation demonstrating the expertise nnd technical and economic capability of such person.

21. (1) Except as a nominee of the State, no member, Prohibitions employee or representative of the State or public service shall, directly or irnlirectly, acquire or hold any right or interest under any contract and any instrument purporting to confer such right, or interest on any such person shall be null and void. (2) No person shall acquire by tra.nsfer, assignment or any other moans any right or interest under any contract which he is otherwise barred from obtaining in his own behalf under the provisions of this Act.

22. (1) Except as otherwise provided in subsection (3), the Bids selection of contractors shall be carried out through public competitive bidding or such other competitive procedures as may be determined by the :Minister. (2) 'l'he Minister shall publish in the Gazette a description of t,he areas for which bids are to be solicited along with the procedures and rules relating to the submission of such bids. (3) Notwithstanding the preceding subsections, the Minister may, with the approval of the Committee, select contractors other than through competitive bidding procedures in the following cases- (a) where 1;he technical or economic circumstances make it advirnible; or (b) where he determiner{ that the circumstances so require.

23. For the purposes of this Act, the territory of the Republic, or parts thereof, shall be di~·-i~ed into b:ocks, ac- cording to a grid system, in accordance with regulations to be prescribed by the Minister. PARTV TYPE AND NATURE OF CONTRACTS Conditions 24. (I) Subject to the other provisions of this Act and to any of other condition as may be specified in a contract, a contmctor contract shall be entit,led for the duration of such contract to the ex- . elusive right to carry out petroleum operations in a contract area, and to freely lift, dispose of and export the petroleum to which he is entitled under such co11tract. (2) Except as may otherwise be provided: in a contract, the contractor shall take upon himself all the risks inherent in petroleum operations and shall commit himself to supply exclusively for his account, the technology, capital, equipment, machinery and all other investments required for petroleum operations in the contract area: Provided that- (i) in the fulfilment of this obligation the contractor shall not have recourse to bank credit from institutions, companies or enterprises operating in the Republic; and (ii) in the case of termination of a contract due to non- discovery of petroleum, the State shall not be obliged to make any reimbursement to tne contractor with respect to the investments made. Contents 15. Each contract shall inolude the following: of ,contract (a) the procedures for management and control by the State of petroleum operations; (b) the duration of the contract; (c) the investment and other obligations of the contractor; (d) the requirement that a letter of guarantee be sub~ mitted by the contractor to secure the fulfilment of the exploration obligation!l undertaken; (e) provisions regarding the sharing of revenues between the State and the contractor, and terms as to tlw recovery of expenditures made by the contractor, as applicable to the particular contract; (f) a description of thB contract area on the effective date of the contract; u,nd (17) the procedure for determining the existence of a com., mercial discovery and for delimiting the area involved,

26. In addition to the provisions of section twenty-five, every Obligations of coutra.ct shall require the contractor to undertake the following contractor obligations: (a) to employ and train Zambian nationals to the fullest extent possible with a view to the replacement of foreign personnel as soon as may be practicable; such training and employment to be carried out in .accordance with a programme approved by the Minister; (b) to maintain, and furnish to the Minister, periodic reports, records, return.fl, m1mple8 and data concerning petroleum operations; (c) to keep current financial and cost accounting records of petroleum operations, with pertinent records a.nd vouchers; during the term of the contract, in ;accordance with normal accounting practices in the international petroleum industry; (d) to permit the State or its authorised representatives reasonable inspection and audit rights over all petro- leum operations and over all records, reports and returns maintained or submitted to the Minister; (e) to purchase Zambian goods and services, if, in terms of price, quality and availability, such goods and services are within such margins of competitiveness with imported goods and ser,rices as may be agreed in the contract; (J) to expend a minimum amount and carry out certain minimum work in the contract area during the exploration period; (g) to present annually to the Minister, complete work pro- grammes and budgets for petroleum operations to be conducted for each year; (h) to report immediately to the Minister any discovery of petroleum, and supply a sample thereof to the :Ministry within a reasonable time after the date of such di,,covery; (i) in the case of a commercial discovery of petroleum, to delimit the area involved, develop the discovery and commence production with due diligence; (j) to appoint, in cases where the contractor is a person who is not resident in the Uepublic or whose head office is elsewhere than in t;he Republic, a representa- tive, and in his absence a replacement therefor, with full powers to represent the contractor in all matters relating to petroleum. operations, including the obligations imposed by this Act; and (k) to supply to the State out of any petrnleurn to which he is entitled pursuant to the contract such quantity of petroleum as may be required to meet the require- Ptents of the Republic for internal consumption : Provided that the quantity uf petroleum to he so supplied by any contractor 8hall be de term inod on a basis that does not discriminate against any individual contractor and that the price therefore shall be fan- and reasonable. Term of oont,ract, 27. (1) The term of a contract shall be divided into an exploration period and a, development nnd p.rndunt.ion [K·,·iocl. (2) The exploration period shall not exceed ten years in duration: Provided that under exceptional circumstances such duration may be extended for such period and upon such terms and conditions as may be specified in a contract, or as may be approved by the Comnuttee. (3) Where no commercial discovery is made dming an exploration period the contract shall terminate. (4) Where a commercial discovery is made the development and production period, relating to such discovery, which shall not exceed twenty-five years in duration, shall t,hcreuµon commence. Relinquish- 28. Every contract shall provide for the relinquishment ment of part or parts of the contract urea at such time or times as shall be prescribed therein: ProYidcd that the obligation to relinquish piut vr p,lrL" of the contract area shall not apply to any part of the contract area encompassing the area of a commercial discovery. Tr1i.nsfors 29. Except with the prior approyal of the l\1iniBter, no nnu contractor shall assign, encumber or transfer any contract, 1isBi1?nments or any rights or obiigations arising out of a contract; an<l any such transfer, assignment or encumberancc shall ho null and void. Tcrminutfon 30. :r,:n:ry contract shall stipulate the terms and condit10ns upon which the contract may b0 terminated by the Sl;:it;e or the contractor a.11d the effects of such termina.tion: Provided tha.t the termination of any contmct, fot· whatever reason, shall not affect in any way any liability incurred by a con tractor before such terminatfon. Duty to 31. Each contmctor shall at ail tinrns .indemnify the State irnfomni!y and its representatives and agents against all and any claims r:mdc by third parties in respect of auy injury, damaµ;e or loss caured by an act or mnisrdon of tlie contractor, his 1iontr1ietors, his snhcontractm·,;i or hfo agents, employees OJ' reJ>resentntives in the courne oft he eon duct of petroleum opemtiom1.

32. (1) In the conduct of petrolev.m operations, eaoh Coll80rvatiOJ1 and contractor, in accordance with generally accepted practices work in the international petroleum :i:radustry, shall- practicee (a) carry out petroleum operations using the most re- liable, modern and efficient techniqup,a; (b) take steps to obtain the maximum efficient level of production, determined in accordance with the terms and conditions of thE, 'lontract, compatible wi_th the nature and extent of the petroleum reservoirs discovered ; (c) control the flow and prevent the waste or escape of petroleum, water, Milling fluid.8, or any mixture thereof; (d) generally adopt the necessary measures for the pro- tection of flora, fauna and other natural resources; (e) avoid th(;) pollution or contamination of water, atmos- phere or land; (j) maintain in ~ood condition aml repair all structures, equipment and other property used in petroleum operations; (g) carry out petroleum operations in a proper, safe and workmanlike manner; (h) take all steps necessary to secure the safety, health and welfare of persons engaged in petroleum operat- ions; (i) upon the tennination of the contract,. carry out all clean-up operations and render the contract area safe; and (j) at any time completely remove any structure or facility which has ceased to be used. (2) The procedures tor the application and enforcement of such conservation and work practices shall be prescribed in the regulations and may be dE,veloped in the contract. P.ARTVI i,AREAS OF OPERATION AND SURFACE Rwm.·s

33. The Minister may, with the approval .of the Committee, Areas closed t,o declare certain areas of the Republic to be closed to some or petrol~um all petroleum operations: operations Provided that- {i) such closure shall be without prejudice to existing rights to conduct petroleum operations in the areas concerned; and (ii) the Minister may, wi1;h t;he approval of the Committ,ee, permit pet,roleum opemtion.s to be carried 9ut therein, subject; to such i;erms and conditions as he may determine. Restrict,@d 34. (I) Ko person shall, without the written consent of the areas l'resident, carry out petroleum operations-- (a) upon any land dedicated as a place of burial; (b) upon a,ny land containing any ancient monument or Cap. 266 national monument . as defined in the Na.tural and Historical Monuments and Relics Act; (c) upon any land 1Ybieh is the site of or is within one hundred n10tr0s of nny bnildin1s or dam owned by the Republic; (d) upon any land forming pnrt of a Govern111eut aero- Cap. UO, drome as d.-,Hned in the Air Xnvi~i«tion Reguhtions; p. 18 (e) upon any land occupied as a village; or (f) upon any land forming p,trt of a defonco establishment. (2) No persou shall, without the writt.en consent of the owner or legal occupier thereof or his duly 11,uthorised agent, carry out any petroleum operations-- (a,} upon a,ny land which is the site of or which is within two hundred metres of any inhabited, occupied or temporarily unoccupied house or building; (b) within fifty metres of any land which has been cleared or ploughed or otherwise bona fide prnpared for the growing of farm erops or upon which farm <'rop,~ are growing; (c) upon any land from which, during the twelve months immediately preceding, farm crops ha.ve been reaped; (d) upon any land which is the site of or is within one hundred metres of any cattle dip, tank, dam ot· any private water as defined in the '\Va.t.er Act; or (e) upon any land forming part of an aerodrome, other than an aerodrome referred to in subsection (I) (d); Provided that where consent is nnreasonablv withheld, the President ma,v authorise the conduct ofpotroleu1;1operatioru, in such areas snhject t-0 such terms and conditions as he may determine. (3) No person shall, without the written consent of the President carry out petroleum operation.s upon any land- (a) reserved for the purposes of any railway tra,ck or within fifty metres of any ra.ilway track; (b) used as a forest, nursery or plantation or as a timber depot, aawmill or other installation foi< working ri fore.st; (c,) used as a street, road or highw,iy; and no contnwtor shall carry out petroleum operations upon any land--- (d) declared to be a National Forest or a Local :Forest, a.s denned in the Forests Act without complying with Cap. 311 the provisions of sections sixteen and twenty-four of that Act; (e) in a National Park, without complying with section thirty of the National Parks and Wildlife Act. Cap, 316 (4) Every person carrying out petroleum operations shall, when so requested, produce evillence of the T'ight to carry out such operations to the legal owner or occupier of the land upon which such operations are being carried out, or to t,he duly authorised agent of such owner or occupiei·, and in defa"Nlt of such prnduction such person may be treated as a trespasser. 35, {I) Subject to the provisions of this Act or the terms Surfaco rights and and conditions of any contract. and any other law which oom- prohibits, regulates or restricts the entry into any area of the pellSation Republic, the contractor may enter into, occupy and carry out activities necessary for the conduct of petroleum operations in the contract area and whilst engaged therein may: (a) within the contract area erect temporary or permanent houses, buildings, engines, machinery, plant and other works, and acquire in the prescribed manner such rights of way, easements and other rights of access as may be necessary for the proper execution of petroleum operations; (b) tak~ and use water for dowestic use and for the pur- poses of petroleum operations in accordance with the provisions of the Water Act; Cap, 312 (c) subject t,o the provisions of the Roads and Road Cap. 766 Traffic Act and the Aviation Act, construct, maintain Cap. 740 and operate all such airfields, roads, bridges, com- munication systems and conveniences as may be nec,e&<;a,ry; (d) subject to the provisions of the Water Act, lay water Oap.312 pipes and make water courses and ponds, dams and reservoirs, lay drains and sewers and construct and maintain sewage disposal plants; (e) subject to the prior approval of the Minister-·-· (i) construct, reconstruct, alter and operate pipe- lines, pumping stations and other necessary facilities incidental thereto; and (ii) operate and maintain at any place within the Republic such other facilities and works ati may he ne(Jessa,ry for carrying out pe1,roleum operatiom;. {2) The rights conferred by subsection (1) shall be exercised reasonably so as not to affect adversely the interests of any legal owner or occupier of the land on which such rights are exercised to any greater extent than is necessitated by the reasonable and proper conduct of the operations concerned. (3) Where the contract area includes an area of land which is owned by or vested in the State, such land shall, subject to the other provisions of this Act, be at the disposal of the contractor to the extent required for petroleum operations by virtue of the existence of the contract. Cap. 289 (4) (a) Subject to the provisions of the Land (Conversion of Titles) Act, where the contract area includes an area of land over which any person other than the State has a lawful interest or the land is in use by the State, the contractor shall negotiate with such person or the State, as the case may be, for the grant. of a right-of-way, easement or such other right of access as may l;>e necessary for the conduct of petro- leum operations thereon; (b) Where there is no agreement between such person and the contractor concerning the grant of a right-of- way, easement or such other right of access, the contractor may apply, through the Minister, to the President to have the said area compulsorily acquired Cap. 296 under the provisions of the Lands Acquisition Act: Provided that all compensations due for such rights compulsorily acquired by the President on behalf of the contractor shall be borne by the contractor. (5) 'l'he acquisition of rights-of-way, easements or other rights of access by a contractor over land outside the bounda- ries of the contract area for the purpose of petroleum operations shall be made in accordance with the regulations made here- under and any other applicable law. (6) Any and all rights acquired or conferred pursuant to this section shall automatically expire when the contract to which they relate is terminated. (7) Without prejudice to the preceding subsections of this section, the contractor shall, on demand being made by any person having a lawful interest in land upon or under which petroleum operations are being carried out, pay to such person fair and reasonable compensation for any disturbance of his surface rights, and for damage done to the surface of the land, or to any livestock, crops, trees, buildiugs or works as a result of petroleum operations. 'J'he amount of compensation payable shall be determined by agreement between the parties or if the parties are unable to reach agreement or the agreed com- pmrnaLion is not paid, ei1;hcr party may refer the matto.r to the Minister who shall deal with the same as if the matter had arisen under the provisions of the Mines and Minerals Act. Cop. 329

36. (1) Without prejudice to the provisions of subsection Other {l) of section twent1our the State shall have the right to grant minerals to persons, other than a contractor, licences pursuant to the Mines and Minerals Act and the Prescribed Minerals and Cap.329 Materials Commission Act for the prospecting and exploration Cap. 332 for, and mining of, substances other than petroleum within the contract area. In such ever.i, the contractor shall afford safe passage for the licensee to that portion of the contract area in which such licensee proposes it,o carry out its operations: Provided that the operations of such licensee shall in no way hinder petroleum operations. (2) If any historical objects, fossils or minerals of economic interest or capable of development are discovered by a con- tractor during the course of petroleum operations, the con- tractor shall report such discovery and shall supply, in the -case of a discovery of minerals, a sample thereof to the Minister. PART VII GOVERNMENT REVENUES

37. A contractor, his contractors and subcontractors shall Income ta:x: be liable for the payment of income tax in accordance with the Income Tax Act with respect to income deriving from petro- Cap. 668 leum operations.

38. (1) The income of individua,ls who are employed by Employee taxation oontractors, their contractors and subcontractors, or who hire their services out to such organisa,tions, shall be subject to payment of income tax in accordance with the Income Tax Cap, 668 Act. (2) A contractor, his contractors and subcontractors may be liable to selective employment tax in accordance with the Selective Employment Tax Act. Cap. 666 (3) A contractor, his contractors and subcontractors shall be obliged to withhold and pay to the State any income tax assessed on the taxable income of such individuals in accor- dance with and as required by the Income Tax Act. Cap. 668

39. (1) The Minister shall require a contractor to pay to the Royalty or State a royalty or production payment in cash or in kind, at production payment the option 0f the State, upon the gross value or volume, as the case maybe, of crude oil produced and saved in the contract area after deducting the amount of crude oil used and con~ sumed in the conduct of petroleum operai;ions. {2) The Minister may require a contractor to pay to the State a royalty or production payment based 0n the groas value or v·olmne, as the ease may be, of natural gas produ<'..od, saved and sold from the contract area after deducting the amount of natural gas used and consumed- in the conduct of petroleum operations. (3) The am.ou.nt of such royalties may be prescribed by the regulations or in individual contracts. Surface 40. Every contract shall require the contractor to make rentals annual surface rental payments in respect of the contract area, and the amount of such surface rental shall be prescribed in the regulations. Other fee,,, 41. Provision may be made in the regulations or in in- oharges 811d dividual contracts for the payment by the contractor of fees, levies charges or other levies to the State in connection with the carrying out of petroleum operations pursu1:1.nt to this Act. Exemptions 42. (1) A contractor shall be granted exemptions from customs duties, levies or imposts as may be prescribed by any other law, on the exportation of petroleum which such con- tractor is entitled to export pursuant to his contract. (2) A contractor, his contractors and subcontractors may be granted, upon approval by the Minister responsible for the administration thereof, relief from the following- (a) any tax or customs duties payable on the importation and subsequent exportation of machinery, equipment, materials and other items required for petroleum operations; (b) any tax or customs duties payable on the importation and subsequent exportation of reasonable quantities of household goods and personal effects by non- Zambian employees of such contractor, his con- tractors and subcontra,crors; and (c) such other taxes, imposts, levies and duties imposed within the Republic, except for income tax as provided for in section thirty-seven. PART VIII GENERAL PROVISIONS Immunity ofpublio 43. The provisions of section eleven shall apply muta,tia ofiloers mutandia to any public officer. Prohibition of 44. (l) No person shall, without the consent in writing publioa.tion given by or on behalf of the Minister, publish or disclose to any or person, otherwise than in the course of his duties, the contents disolosure of of any document, communication or information whatsoever, information which relates to, and which has come to his knowledge in the to course of, his duties under this Act. unauthorised ()61'801!11 (-2) No person having information which to his knowledge hll,tt been published or disclosed in contravention of subsection (1) shall publish or communicate any such information t,o any other person.

45. Contra.eta may provide for arbitration of disputes Disput(ls between arising thereunder between the State and the contractor in State and acoordanoo with rules issued and adrnin.istei·ed by rec.,ognised oontmctor intel'Uational bodies.

46. If any dispute, controversy or difference arises between Disputes J,etween two or more contractors or between a cont1ractor a,nd any oontra.otor person holding mining rights pursuant to the Mines and and others. Minerals Act or the Prescribed Minerals and Mattlrials Com- Cap. 329 mission Act or between a, contractor and any other person, the Cap. 322 parties to such dispute, controversy or difference may jointly or individually apply to the Minister to investigate and resolve the same pursuant to and in accordance with the provisions of Part XIII of the Mines and Minerals Act. Cap. 3.29

47. (1) Where any contract is entered into and it is sub- Revocation sequently found t}1at such contract was entered into as a result of any false or fraudulent representation or in con- sequence of anr incorrect information, the Minister may give written notice to the contractor requiring him to show cause within a specified time why such contract should not be revoked. (2) Where any contractor is in breach of any provision of this Act, the Minister may give written notice to the contractor requiring him to show cause within a specified time why his contract should not be revoked. (3) If the contractor fails to comply with a notice given pur- suant to su bsecUon (1) or (2) within the time specified or if the cause shown be deemed inadequate, such contract may there- upon be revoked by the Minister, with the approval of the Commjttee. (4) Notice of such revocation shall be published in the Gazette and shall be entered upon the register. A copy of such notice shall be sent to the contractor at his registered address in the Republic.

48. (l) 1'he revocation of a, contract pursua,nt to section Effect of forty-se.1Jen shall entail the immediate cessa,tion of all rights and revocation prjvj]eges eonfor.red on the contractor by virtue of such con- tract, the devolution to the State of the contract aref1 and the automatic forfeiture of any guarantees su brnitted by the contractor to secure the fulfilmento£,t;he obligations undertaken. (2) Revorn1tiun under section forty-,seven shall not, in o,ny way affect the JfahiW;y of any person cor.werned arising out of suol1 breach before r;unh revocation, and shall not, be a bar to any legal pmcendinv;s ,!'~}la.ting thereto. Penalty 49. Any person who contravenes any of the provisions of this Act, and such contravention is not an offence under any other written law, sha,ll be guilty of an offence and shall upon conviction. be liable to a fine not exceeding ten thou~:ma kwacha or to a term of imprisonment not exceeding three years, or to both such fine and imprisonment Regulations 50. The Minister may make regulations for the better carrying out of the purposes of this Act. Non.- SL Except ns otherwise specifirn,,H_y provide(~ in or under application of the this Act, the provisions of the Mines and Minerals Act shall not Mines and apply to pet:roleum or petroleum operations. Minerals Act. Cap329