Petroleum (Exploration and Production) Act, 2011 (Act No. 7 of 2011)

2 Ownership of petroleum resources 36. Conditions of application for petroleum licence. 37. Application for petroleum licence. PART III-ADMINISTRATION 38. Notification of intention to grant petroleum licence. 3. Minister to be responsible for adininistration of Act. 39. Grant of petroleum licence. 4. Establishment of Directorate. 40. Ratification and publication of petroleum licence. 5. Functions of Directorate. 41. Content of petroleum licence. 6. Operational independence of Directorate. 42. Rights conferred by petroleum licence. 7. Powers of Minister. 43. Term of petroleum licence. 8. Director -General of Directorate. 44. Extension of petroleum licence. 9. Other staff of Directorate. 45. 11inimurn exploration programme. 10. Use of independent professionals and experts. 46. Extension of exploration period. II. Establishment of Sierra Leone National Petroleum Company. 47. Guarantee in respect of work programme. 12. Conduct of affairs of National Company. 48. Licence area annual fee. 13. Annual report of National Company. 49. Relinquishment oflicence area. 50. Discovery of petroleum. PART IV-ACQUISITION OF PETROLEUM RIGHTS 51. Appraisal plan. 14. Acquisition of petroleum rights. 52. Appraisal report. IS. Types of petroleum rights. 16. Prequalification of applicants for petroleum rights. PART VII-DEVELOPMENT AND PRODUCTION 17. Conduct of petroleum operations. 53. Entry into production phase. 18. Scientific investigations 54. Plan for development and operation. 19. Register of qualified persons. 55. Plan for development and operation to be effective on approval. 56. Execution of plan for development. PART V-RECONNAISSANCE PERMIT 57. Restriction on approval of plan for development and operation. 20. Application for reconnaissance penn it. 58. Amendinent of plan for development and operation. 21. Content of application for reconnaissance pennit. 59. Postponement of development. 22. Grant of reconnaissance pennit. 60. Prudent operations. 23. Content of reconnaissance pennit. ill IV 61. Joint development 94. Claim of damages. 62. Cross border petroleum operations. 95. Jurisdiction. 63. Directives for recovery of petroleum. 96. Provision for safety. 64. Measurement of petroleum obtained. 'J7 Safety precautions. 65. Inspection and sampling of petroleum. 98. General requirements for emergency preparedness. 66. Purpose of inspection and sampling. 99. Emergency preparedness against deliberate attacks. 67. Property in petroleum passes to licensee at wellhead. 100. Safety zones. 68. Supplies to cover national requirements. 101. Suspension of petroleum operations. 69. Supplies in the event of war, threat of war, other crisis. 102. Commission of Inquiry. 70. Use of natural gas. 103. Application of Part 71. Restriction on flaring and venting of natural gas. 72. Right to enter land. PART XII-FTNANOAL PROVISIONS 73. Notice to owners or occupiers of land. 104. Royalties and taxes 74. Right to compensation. 105. Disclosure of payments to State. 75. Amount of compensation. 106. Market value on petroleum. 76. Permit for laying and operation of pipelines. 107. Royalty payment in kind. 108. Area fees. PART VIII-DECOMMISSIONING 109. Payment for rental of State property. 77. Decommissioning plan. 110 Bonus payments. 78. Decommissioning Fund. 111. National Company to have right of first refusal. 79. Decommissioning by State. 112. Foreign currency transactions. 80. Removal and sale of property. PART XIII-ARBITRATION 81. Liability for damages for disposal of decommissioned facility. 113. Arbitration. 82. Encumbrances. 83. Takeover offacilities by State. PART XIV-TRANSFER REVOCATION AND SUSPENSION OF PETROLEUM RIGHTS PART IX-STATE PARTICIPATION 114. Transfer of licence. 84. State participation in petroleum operations. 115. Revocation or suspension of petroleum licence. 85. Participating interest. 116. Relinquishment, surrender and revocation of petroleum licence. 86. Right of first refusaL 117. Register of petroleum rights. PART X-EMPLOYMENT ANDLOCALCONTENI PARTXV-GENERAL PROVISIONS RELATING TO PETROLEUM RIGHTS 87. Employment and training of Sierra Leoneans. 118. Confidential reports. 88. Preference for local goods. 119. Public access. 89. Training, Research and Development Fund. 120. Review of tenns and conditions. 90. Technology transfer. 121. Reservation of areas. 122. Information, data, reports and records. PART XI-ENVIRONMENT, HEALTHAND SAFETY 123. Accounts to be kept 91. Environment and air quality emissions. 124. Protection of data. 92. Liable party and extent of liability. 125. Ownership of petroleum data. 93. Pollution or damage by contractor. v PARI XVI-OFFENCES 126. Disclosure of prohibited data. 127. Obstruction of Minister, officer SIGNED this 25th day of July, 2011. 128. Obstruction of licensee. 129. Conflict of interest 130. Offences committed by body corporate. DR ERNEST BAI KOROMA, 131. Order offorfeiture. 132. Contravention of decisions and orders issued under this Act. President 133. Miscellaneous Offences. 134. Use offacilities. PARI XVII-MISCELLANEOUS 135. Power of entry. 136. Right to place facilities in licence area. 137. Petroleum operations to be conducted from Sierra Leone. 138. Licensee to bear cost of supervision. No.7 2011 139. Survey of wells and facilities. 140. Security for fulfilment of obligations. 141. Responsibility for commitments. 142. Obligation to comply with this Act Sierra Leone 143. Compliance with conditions of petroleum rights. 144. Powers of Minister and authorised officers. THEPETROLEUM~LORKnONANDPRODUCTIO~ Short title. 145. Service of documents. 146. Indeminty of the Republic of Sierra Leone. ACT, 2011. 147. Code of practice. 148. Supremacy of Act Being an Actto provide for the management of petroleum 149. Force majeure. operations, to regulate and promote petroleum exploration, 150. Vesting of assets. development and production; to regulate the licensing and 151. Transfer of certain employees. participation of commercial entities in petroleum operations; to 152. Regulations. provide for proper supervision of petroleum operations, to promote 153. Repeal and savings. the participation of Sierra Leoneans in the petroleum industry; to 154. Transitional provisions. provide for efficient and safe petroleum operations; to provide for an open, transparent and competitive process of licensing and for other related matters. ] Date of com- mencement. ENAC1ED by the President and Members of Parliament in this present Parliament assembled.

2 No.7 Petroleum (Exploration andProduction) Act, 2011 No.7 Petroleum (Exploration andProduction) Act, 2011 3 PART I-PRELIMINARY transactions, sales directly or indirectly to affiliates, or sales involving consideration other than payment Interpretation. 1. In this Act, unless the context otherwise requires- in U. S. Dollar or currencies convertible thereto, or affected in whole or in part by considerations other "affiliate" means any person, whether an individual, than usual economic incentives for commercial anTIS corporation, partnership, unincorporated length petroleum sales; association or other entity- "call for negotiations" means an invitation for Ca) in which a licensee directly or indirectly holds pre qualified persons to enter into negotiations more than fifty percent of the share capital or within a specified period, for a petroleum licence in voting rights; relation to an area specified by the Minister; (b) which holds directly or indirectly more than "call for tenders" means an invitation for prequalified fifty percent ofthe share capilal of or voting persons to submit a tender for a petroleum licence rights in a licensee; in relation to an area specified by the Minister; Cc) in which the share capital or voting rights are "carried interest" means an interest held by the Slate directly or indirectly and to an extent more in respect of which the contractor pays for the than fifty percent held by a company or exploration and development costs without any companies holding directly or indirectly more entitlement to reimbursement from the State; than fifty percent of the share capital of or "contractor" means cny per:;on with whom a holder of voting rights in a licensee or; a petrol eum right has a1la-ed i rto a cortract for the Cd) which holds directly five percent or more of perfommceof obi igcti ons under a petroleum rig,t; the share capital of or voting rights in a "crude oi I" meEI1S hydrocabons wn ch are :;01 id or licensee; liquid under normal alrrospheric conditions end i ncI u::les condensates end di sti IIales ottai ned from "appraisal" means a programme carried out following na:ural gas; a discovery of petroleum for the purpose of delineating the accumulation of petroleum to which "decomrrission" mea1S to undertake activities in that discovery relates in terms of thickness and lateral respe:t of a petroleun facility LpOn the perrm1€l1l: extent and estimating the quantity of recoverable cessati on of petrol eum operali ons to ensurethct the petroleum therein; fa:;i Iity issctely removed or Ieft ina perrranent , scte and sacure conditi on; "anTIs length commercial transaction" means a sale to "clevel opment" incI u::les the bui Idi rg end install cti on a purchaser or purchasers that are independent of of faci Iitiesfor the prodLdion of petroleum and the the seller, which do not involve petroleum exchange drillirgof cleveiopmertwellS; or barter transactions, government to government

4 No.7 Petroleum (Exploration andProduction) Act, 2011 No.7 Petroleum (Exploration andProduction) Act, 2011 5 "development area" means part of an area which, (b) vessels, vehicles or craft when stationary and following a commercial discovery of petroleum has used for drilling or support of ongoing been delineated for production according to the terms petroleum operations; and ofthe petroleum licence; Cc) vessels, craft or vehicles for transportation "Directorate" means the Petroleum Directorate of petroleum in bulk when connected to a established by section 4; facility for loading of petroleum, but not when in transport; "Director-General" means the person appointed to be Director-General under section 8; "field" means a geological structure or feature playing "discovery" means a discovery of petroleum which host to one or more reservoirs from which petroleum has not previously been known to have existed and production may be commercially undertaken through which has been recovered at the surface in a flow a defined set of facilities; measurable by conventional industry testing methods; "flaring" means combustion of hydrocarbons without application of the resulting heat or gases for any "drilling" includes all preparations for and useful purpose; implementation of operations surrounding the drilling of a well and operations such as well completion, "gas venting" means the release to the atmosphere of data acquisition, monitoring, well control, combustible gas without flaring; modification and plugging of existing wells; "Government" means the Government of Sierra Leone; "exploration" means the search for petroleum via geological, petrophysical, geophysical, geochemical "land" includes- or geotechnical activities and the drilling of exploration wells, including appraisal wells, and Ca) land beneath the territorial waters, and activities connected therewith; (b) the subsoil below the seabed; "facility" means- "licence area" means an area covered by a petroleum Ca) any plant, structure, equipment, device or licence; other associated installations or infrastructure including pipelines, cables, "licensee" means a person to whom a petroleum licence valve stations, pump stations and is granted under this Act; compressor stations constructed, placed or used in order to carry out petroleum "market price" means the price at which oil value will operations; be assessed as the base for calculating royalty payments;

6 No.7 Petroleum (Exploration andProduction) Act, 2011 No.7 Petroleum (Exploration andProduction) Act, 2011 7 "Minister" means the minister responsible for the "petroleum reservoir" means a naturally occurring management of petroleum matters and, until the discrete accumulation of petroleum in any [onn establishment of a ministry with responsibility for whatever; petroleum matters, the person appointed by the "petroleum right" means a right as established in President to oversee the administration of this Act section 15; and all aspects of petroleum resources management; and "ministry" shall be construed accordingly; "pollution" means any direct or indirect alteration of the physical, thermal, chemical, biological or "National Company" means the Sierra Leone National radioactive properties of any part of the environment Petroleum Company established under section 11; that affects any beneficial use adversely, to cause a condition which is hazardous or potentially "National Revenue Authority" means the National hazardous to public health, safety or welfare, or to Act No. 11 Revenue Authority established by section 3 of the animals, birds, wildlife, fish ar aquatic life, arto plants; of 2002. National Revenue Authority; "pollution damage" means damage or loss caused by "natural gas" means hydrocarbons which are gaseous pollution as a consequence of petroleum operations; under nonnal atmospheric conditions and includes wet gas, dry gas and residue gas remaining after the "production" means the extraction and disposal of extraction of liquid hydrocarbons from wet gas; petroleum, including development operations and all other works and services connected therewith; "operator" means any company executing on behalf "production activities" means activities related to the of a licensee, the day-to-day management of development of fields, the production of petroleum petroleum activities; or the construction, installation, operation or maintenance of production facilities and includes "participant" means a person who has a beneficial activities- interest in a petroleum right; Ca) for the recovery of petroleum; "petroleum" means crude oil or natural gas or a (b) to establish the nature and extent of a combination of both; discovery and the appropriate techmques to be employed in respect of the production of "petroleum licence" means an authorisation to carry petroleum; and out exploration, development and production of petroleum issued by the Minister; Cc) for the transportation, treatment, processing and separation of the petroleum "petroleum operations" means the exploration, development or production of petroleum, but does not include exploration activities, drilling activities and transportation and disposal of petroleum; workover activities;

8 No.7 Petroleum (Exploration andProduction) Act, 2011 No.7 Petroleum (Exploration andProduction) Act, 2011 9 "reconnaissance" means the undertaking of activities "well" means a borehole obtained by perforation of for the purpose of assessing the geological, the earth's surface using conventional drilling either geophysical, geochemical and geotechnical in a vertical, inclined or horizontal configuration, and characteristics of an onshore or offshore geographic drilled with the aim of discovering, apprmsmg, area covered by a reconnaissance permit, but not producing or injecting petroleum. drilling; PART II-OWNERSHIP OF PETROLEUM "reserved area" means an area that has been designated by the Minister as not to be subj ect to a 2. (1) All rights of ownership in and control of petroleum in Ownership of petroleum licence; its natural state in, under or upon any land of Sierra Leone are vested petroleum . .. . . . . resources. m the Repubhc of SIerra Leone notwlthstandrng any nght of ownership "State" means the Government of Sierra Leone; or othervvise that any person may possess in and to the soil or water "storage facility" means any bulk storage facility and in, under or upon which petroleum is found or situated. its auxiliary equipment that is or is intended to be used for storage of petroleum either on the surface (2) This section applies to all land, including land covered or subsurface of the land; by water, which- "sub-contractor" means any person with whom a (a) is in Sierra Leone; contractor has entered into a contract for the perforruance of obligations under a petroleum right; (b) is under the territorial waters of Sierra Leone; "sub-period of exploration" means the initial exploration period, first extension period, or second extension (c) forrus part of the continental shelf; or period, as established in section 43; (d) forrus part of the Exclusive Economic Zone "tariff' means a written statement of rates, tenns and of Sierra Leone. conditions governing access to pipelines or storage facilities; (3) The State shall ensure in the public interest that the petroleum resources of Sierra Leone are explored and exploited in the "territorial waters" means the territorial sea and includes most efficient, effective and timely manner. inland waters; PART III-ADMINISTRATION "territorial sea" means any part of the open sea within 3. Subject to this Act, the Minister shall- Minister to be twelve nautical miles of the coast of Sierra Leone responsible measured from the low water mark; for adminis- (a) be responsible for the general management tration of Act "transportation" means the use of a facility for the of the petroleum resources and the pmpose of conveying petroleum from the point of administration of this Act; extraction to a designated point;

10 No.7 Petroleum (Exploration andProduction) Act, 2011 No.7 Petroleum (Exploration andProduction) Act, 2011 11 (b) have sole authority to accept applications (c) review budgets submitted by a holder of and bids submitted pursuant to a call for petroleum rights in respect of a work tenders or a call for negotiations; programme and make recommendations to the Minister; (c) have sole authority to grant petroleum rights under this Act for and on behalf ofthe State; (d) participate in the tender process and negotiations of petroleum licences, and in the (d) ensure that this Act is complied with by all administration of petroleum rights; persons carrying out petroleum operations under this Act; (e) participate in the measurement of petroleum to allow for assessment of royalty and bonuses due to the State; (e) issue such directives as may be necessary for the implementation of this Act (I) ensure that holders of petroleum rights uphold laws, regulations, rules and contract Establishment 4. There is hereby established the Petroleum Directorate. af Directo- tenns; rate (g) ensure optimal levels of recovery of Functions of 5. (1) The object for which the Directorate is established is petroleum resources; the Directo- rate. to monitor petroleum operations in Sierra Leone. (h) promote well planned, well-executed and (2) Without limiting the generality of subsection (1), the cost-efficient operations; Directorate shall- (i) ensure optimal utilisation of existing and (a) assist in the assessment of prospective planned facilities; holders of petroleum rights for purposes of prequalification pursuant to this Act; G) contribute to national budgetary planning and control; (b) review proposed reconnaissance, exploration and appraisal work plans, plans for (k) ensure the establishinent of a central database development and operation and of persons involved in petroleum operations, decommissioning plans submitted by holders manage petroleum data and provide periodic of petroleum rights, as the case may be, and updates and publication of the status of make recommendations to the Minister; petroleum operations;

12 No.7 Petroleum (Exploration andProduction) Act, 2011 No.7 Petroleum (Exploration andProduction) Act, 2011 13 (1) encourage, monitor and enforce the 6. The Directorate shall, subject to subsection (I) of section Operational standards of operation and code of practice . (2) 0f sectIOn 7 and sub sectIOn . 8, b e ill . dependent ill . the perlonnance c Independence of for petroleum operations; of its functions and duties and the exercise of its powers. Directorate. (m) review all tariffs for third party access to 7. (1) The Minister may give directives in writing to the Powers of petroleum facilities and make re- Directorate with respect to the policy to be observed and implemented Minister. commendations to the Minister; by the Directorate, and the Directorate shall comply with the directives. (n) ensure that holders of petroleum rights comply with health, safety and enviromnental (2) The Minister shall not issue directives under standards; subsection (I) that would adversely affect or interfere with the performance of the functions and exercise of the powers of the (0) ensure and facilitate access to and utilisation Directorate under this Act. of facilities by third parties; 8. (I) The Directorate shall be headed by the Director- Director- (P) monitor conditions of operators and their General of GeneraL Directorate. trade practices to ensure that competition and fair practice is maintained; (2) The Director -General shall be appointed by the (q) provide information relevant to the National President subject to the approval of Parliament, and upon such terms Revenue Authority for the collection of taxes, and conditions as shall be stated in his letter of appointment. royalties and fees from petroleum operations; (3) The Director General shall- (r) assess tail-end production and cessation of petroleum operations and decommissioning; (a) possess technical expertise and experience in the petroleum industry; (s) prepare an annual report on the status of (b) not have been convicted of any offence petroleum activities in Sierra Leone, for involving fraud or dishonesty, and submission to the Minister for further submission to Parliament and publication in (c) not have any history of serious misconduct the Gazette and in such other manner as the relating to his official duties in any previous 11inister may detennine; and employment. (t) perform any other function incidental or (4) Subject to this Act, the Director-General shall be consequential to its functions under this Act. responsible to the Minister for- (3) The Directorate shall, to the greatest extent possible (a) the day-to-day administration of the affairs and consistent with this Act, consult and co-operate with ministries, ofthe Directorate; departments and agencies of Government having duties, aims or (b) the supervision and discipline of the other functions related to those of the Directorate. staff of the Directorate;

14 No.7 Petroleum (Exploration andProduction) Act, 2011 No.7 Petroleum (Exploration andProduction) Act, 2011 15 Cc) preparing an annual report on the activities 12. (I) The National Company shall conduct its affairs on Conduct of of the Directorate for the approval of the sound commerCia 'ul ar shll ' '1es and'ill partIe 'I pnnClp a ta k e t he necessary National affarrsof Minister who shall lay it before Parliament, steps to ensure that its revenues are sufficient to produce a reasonable Company. and long-tenn return on the fair value of its assets. Cd) performing such other functions as are (2) In determining what constitutes a reasonable return, assigned by this Act or as directed by the the National Company shall take into account the relevant economic 11inister. and financial considerations, including the need to generate net operating income in an amount sufficient to- (5) The Director General shall be required to disclose any beneficial interest he holds in a petroleum enterprise or company that Ca) meet interest payments on borrowings and may become involved in the petroleum industry in Sierra Leone. to provide for the repayment of loans made to the National Company; Other staff of 9. (I) The Directorate shall also have such other staff as Directorate. shall be required for the efficient performance of the functions of (b) provide for a reasonable proportion of the the Directorate and who shall be appointed by the President on the funds needed for expanding the National advice of the Public Service Commission. Company's activities and for increasing its working capital; and (2) Public officers may be seconded or otherwise render assistance to the Directorate. Cc) provide reserves for replacement of fixed (3) No action shall lie against the Director-General or other assets and equipment, expansion or any other staff of the Directorate in respect of anything done or omitted to be purpose, done in good faith in the performance of any function under this Act. 13. (I) Not later than six months after the end of its financial Annual report Use of ' year, th e N atlOna 1 Company sh a11 sub ' to th e M'mIster, mIt , an annua1 C of National 10. The Directorate may, where it considers it expedient to do independent so, hire or retain the services of such professionals, consultants, and report of its activities, operations, and finances for that year. ompany. professionals and experts. experts as may be necessary for the proper and effective performance of its functions. (2) The annual report shall include the following:- Ca) a certified copy of the audited accounts of Establishment Act No.5 11. (I) There shall be incorporated under the of Sierra of 2009. the National Company together with the audit CampaniesAct, 2009 the Sierra Leone National Petroleum Leone report on the accounts; National Company to manage on behalf of the State, the commercial Petroleum aspects of petroleum operations and the participating Company. (b) a detailed report on production from all licence interests of the State in a petroleum licence. areas in which the National Company participates; (2) The National Company shall, in addition to Act No.5 the provisions of this Act, be subject to and managed in (c) a statement of reserves in all licence areas in of 2009. accordance with the Companies, 2009, which the National Company participates;

16 No.7 Petroleum (Exploration andProduction) Act, 2011 No.7 Petroleum (Exploration andProduction) Act, 2011 17 (d) full disclosure of the payments made by the (a) the name and address of applicant; National Company to the State, in accordance with its fiscal obligations and including taxes (b) description of the project; and royalties; and (c) evidence of satisfaction of pre-qualification (e) a summary of training and internal development initiatives undertaken by the criteria; National Company over the course of the preceding year to increase its technical and (d) such other information as may be required financial capacity, and a description of by the Minister. training and internal development initiatives planned for the forthcoming year. (2) Where the Minister is satisfied on the advice of the Directorate, that the applicant for a petroleum right or to be an operator (3) The Minister shall not later than one month after receipt of the annual report, lay it together with his comments on it, thereunder has been evaluated and accepted to possess such before Parliament. technical, financial, operational, industrial or other expertise to qualifY as a pennitholder, licensee or an operator, he may issue to the applicant (4) Within fifteen days of being laid before Parliament, a notice of qualification. the report shall be published in its entirety in the Gazelle and in such other manner as the Minister may detennine. (3) Subject to section 18, no person shall apply for a petroleum right or qualifY to be an operator this Act, unless the person PART IV-ACQUISITION OF PETROLEUM RIGHTS possesses a notice of qualification. Acquisition 14. Subject to this Act, the right to explore for and produce of petroleum (4) Any person in possession of a notice of qualification rights. petroleum shall be acquired and held under and in accordance with a shall give written notice to the Minister as soon as practicable, petroleum right granted under this Act. regarding any material change in status, corporate or otherwise, Types of 15. The following petroleum rights may be acquired under this financial, technical or operational capabilities. petroleum Act:- rights. (5) The Minister may cancel a notice of qualification (a) a reconnaissance pennit; where- (b) a petroleum licence and; (a) there is an adverse material change in the (c) a permit for the laying and operation of status or capabilities of the person; or pipelines to transport petroleum produced from fields subject to more than one licence. (b) the person or its representatives supply false Prequalifica- or misleading information or fails to supply 16. (I) Any person may, upon payment of a prescribed fee, tion of apply to the Minister to qualify as an applicant for a petroleum right material information, in respect of the applicants for application for qualification. petroleum or operator thereunder and the application shall include- rights.

18 No.7 Petroleum (Exploration andProduction) Act, 2011 No.7 Petroleum (Exploration andProduction) Act, 2011 19 Conduct of 17. (I) Subject to sections 16 and 18 and notwithstanding (2) A person may, upon payment of the prescribed fee, petroleum operations. any right of ownership or othervvise that any person may possess in inspect the register of qualified persons. and to the soil or water, in or under which petroleum is found or PART V-RECONNAISSANCE PERMIT situated, no person shall conduct any petroleum operations except in accordance with petroleum rights granted under this Act 20. (I) A company or group of companies may, upon Application payment of the prescribed non-refundable application fee, apply to for . reconnaissance (2) Any person who contravenes subsection (1) commits the 11inister for a reconnaissance penn it. permit. an offence and is liable on conviction- (2) An applicant may withdraw its application by giving the Minister a written notice of withdrawal. (a) in the case of an individual, to a fine not less than three hundred thousand United States (3) Each application shall, upon receipt by the Minister, Dollars or its equivalent in leones or to be filed in the register of petroleum rights applications which will be imprisonment for a tenn not exceeding two updated regularly. years or to both the fine and imprisonment; and 21. In addition to any other particulars as may be prescribed, Content of application an application for a reconnaissance penn it shall contain- for recon- naissance (b) in the case of a body corporate, to a fine not (a) the name of the company or companies permit. less than five hundred thousand United applying for a permit, particulars of States Dollars, or its equivalent in leones. incorporation and registration, the names and nationalities of directors, the share capital of Scientific 18. (I) The Minister may, in the public interest by instrument the company or companies, and the name of investigations. each person who is the beneficial owner of in writing, consent to the carrying out by any designated person, of more than five per cent of the shares issued non-commercial research activities in the course of a scientific by the company or companies; investigation. (b) an identification of the area to which the (2) Such consent shall be subject to such conditions if application relates; any, as are specified in it. (c) the period for which the pennit is required; Register of 19. (I) The Minister shall keep, maintain and update a register qualified (d) the reconnaissance work programme and persons. of qualified persons in which every person that has been issued a expenditure proposed to be carried out or notice of qualification and are qualified to apply for a petroleum expended in respect of the area to which the right, including operators and non-operating participants. application relates, and the period within which the operations will be carried out;

2D No.7 Petroleum (Exploration andProduction) Act, 2011 No.7 Petroleum (Exploration andProduction) Act, 2011 21 (e) an assessment of the impact which the (2) A reconnaissance pennit may pennit the holder to sell proposed reconnaissance operations may data acquired from reconnaissance operations or exchange the results have on the environment; of any survey undertaken during the reconnaissance operations. (I) a description of the financial, technical and (3) \\!here reconnaissance permits are issued to two or industrial resources available to the applicant; more persons for the same or overlapping area, each of the holders and shall ensure that its activities are not detrimental to the other. (g) any other matter which in the opinion of the 25. (I) A reconnaissance pennit shall be valid from the Terms of a applicant is relevant to the application. effective date, which is the date of registration, unless sooner cancelled recon?aissance permit. Grant of 22. The Minister may, on the advice of the Directorate grant a or tenninated as provided under this Act. recon?aissance reconnaissance pennit to the applicant or applicants. permit. (2) A reconnaissance pennit shall not be extended or Content of 23. A reconnaissance permit shall indicate - renewed. reconnaissance permit. (a) the date and registration number of the (3) A holder of a reconnaissance pennit shall without penn it; undue delay, submit to the Directorate all data obtained under the pennit, but shall not be required to submit interpretation of such (b) the name and particulars of the pennit holder; data. (c) the tenn for which it is granted; 26. (1) A holder of a reconnaissance pennit shall complete Reconnaissance the reconnaissance work programme within the term of the work (d) the particulars of the area covered by the programme. reconnaissance permit. reconnaissance penn it; (2) A holder of a reconnaissance pennit shall not amend (e) the tenns and conditions under it; the reconnaissance work programme without the prior written (I) the work programme to be undertaken in the approval ofthe Minister. reconnaissance period, the estimated (3) A request for approval shall be submitted to the expenditure in respect of the work programme Minister and be accompanied by the prescribed handling fee. and the financial guarantees for non- fulfilment of any part of the work programme; (4) The Minister, on the advice of the Directorate, shall and approve an amendment to a reconnaissance work programme on such (g) fees and other financial conditions. terms as he may think fit. Activities 24. (I) A reconnaissance penn it shall confer on the holder a (5) A holder of a reconnaissance pennit who contravenes authorized by non-exclusive right to undertake reconnaissance operations in the subsection (2) commits an offence and shall be liable on conviction a recon- naissance pennit area. to a fine of one hundred thousand United States Dollars or its permit. equivalent in leones.

22 No.7 Petroleum (Exploration andProduction) Act, 2011 No.7 Petroleum (Exploration andProduction) Act, 2011 23 Holder of a 27. (I) A holder ofa reconnaissance pennit shall within thirty PARI VI-PETROLEUM LICENCES reconnaissance d f h fC . d f h . . d. C permit to ays 0 tee lectlve ate 0 t e reconnaissance pennlt an ill a lorlll provide approved by the 11inister, provide the 11inister with an expenditure 30. (I) Subject to this Act and such rules as the Minister Petroleum guarantees. obligation as a guarantee for fulfilment of the reconnaissance work may prescribe, a petroleum licence shall be acquired through a call licen~edtob be acqUIre y programme. for tenders. tender. (2) The Minister shall not be obligated to grant a (2) The expenditure obligation shall be equivalent to the petroleum licence following a tender process. estimated costs of the reconnaissance work programme and shall remain effective for the duration of the reconnaissance period. (3) Subject to this Act, the Minister may through a competitive tender, invite a prequalified company or group of (3) Where the holder of a reconnaissance permit companies to apply for a petroleum licence. completes part of the reconnaissance work programme, the Minister 31. (I) Subject to subsection (2), where- Call for direct may pennit the holder to reduce the guarantee by an amount equivalent negotiation. to the expenses incurred in respect of the work completed. (a) the Minister, on the advice ofthe Directorate, is not satisfied that the tenns and conditions (4) Upon completion of a reconnaissance work offered pursuant to the tender process are programme, the Minister shall return the guarantee to the holder of the most favourable to the State; or the reconnaissance pennit. (b) the tender process is for any prescribed (5) Where a holder of a reconnaissance permit fails to reason unsuccessful, complete the reconnaissance work programme within the stipulated the Minister shall not grant a petroleum licence pursuant to the call period, the Minister may revoke the permit and the holder shall pay for tenders but may within a reasonable period after that issue a call to the State the part of the expenditure obligation which is equivalent for direct negotiations for a petroleum licence. to the uncompleted part of the reconnaissance work programme. (2) For the purposes of joint development of a reservoir Permit area 28. Upon the grant of a reconnaissance penni!, the pennitholder under subsection (2) of section 61, the Minister shall invite the fee. shall pay a non-refundable fee as may be prescribed by the Minister. National Company for direct negotiations for a petroleum licence. Cessati~n of 29. (1) A holder of a reconnaissance permit shall cease all 32. (I) A call for tenders or direct negotiations shall be reconnaissance. . . . . operations. reconnaissance operatIOns on the cancellatIOn or eXpIratIOn of the published in the Gazette and in such other manner as may be reconnaissance permit. detennined by the Minister. (2) The Minister shall in a call for tenders or direct Calls for (2) A holder of a reconnaissance permit who contravenes negotiations, specify the tenns of the tender in accordance with td~nders or Irect subsection (I) commits an offence and shall be liable on conviction section 34 and the period within which the call remains valid and negotiations to a fine of Fifty Thousand United States Dollars or its equivalent in open to applications. to be Leones. published.

24 No.7 Petroleum (Exploration andProduction) Act, 2011 No.7 Petroleum (Exploration andProduction) Act, 2011 25 (3) Subsections (I) and (2) shall not apply to direct (I) which has not been pre-qualified as an negotiations entered under subsection (1) of section 31, operator or participant under section 35. 34. (I) A call for tenders made by the Minister shall- Invitation to (4) The results of tenders, including the content of submit winning and losing bids shall be published in the Gazette and in such tenders. (a) specify the co-ordinates of the block or blocks other manner as may be detennined by the Minister. to which it relates; Restrictions 33. No petroleum licence shall be granted to an individual or a on grant of a (b) specify the duration of the petroleum licence, petroleum cornpany- including the exploration period and any sub- licence. periods mentioned in this Act; Act No.5 (a) which is not registered or incorporated under of 2009. the Companies Act, 2009; or (c) invite applicants to offer a minimum work programme which shall include provisions (b) which is bankrupt or which is in liquidation for seismic surveys, drilling of wells and other than a liquidation which forms part of a estimated expenditure for the work scheme for the reconstruction or programme; amalgamation of the body corporate; (d) specify the terms of the licence, including (c) in respect of which an order has been made those that are not subject to variation and by a court for its winding up or dissolution; those that are to serve as the basis for the analysis of tenders; (d) which has made a composition or (e) specify the criteria against which tenders will arrangement with its creditors; be evaluated and winning tenders will be selected and; (e) which has among its directors or shareholders a person holding at least ten (I) specify the date on and the address to which percent of its share capital and who- tenders and the number of copies are to be submitted, (i) is under the age of 18 years; (2) A call for tenders shall not include a licence area or (ii) is an un-discharged bankrupt, having part of a licence area or any reserved area or part of a reserved area. been adjudged or otherwise declared bankrupt under any enactment, or 35. (I) Subject to section 33, no company other than a Qualification 'f' as an operator or a partIcIpant company tha t qual lIes , , sh a11 app1y lor c to respond to call for enters into any arrangement or scheme of composition with his creditors; a petroleum licence in response to a call for tenders or direct tenders or negotiation. direct negotiation. (ni) has been convicted of an offence involving fraud or dishonesty; (2) Notwithstanding subsection (1)-

26 No.7 Petroleum (Exploration andProduction) Act, 2011 No.7 Petroleum (Exploration andProduction) Act, 2011 Ca) a company shall not apply on its own unless 36. (1) An applicant for a petroleum licence pursuant to a Conditions of the company is qualified as an operator; . . ca11 f or tend ers or elireet negotIatIOns may WIt. heir' aw Its app 1"lcatlOn for applicatIOn a by giving the 11inister a written notice of withdrawal. petroleum licence. (b) an application shall not be made by two or more companies jointly unless- (2) Each application for a petroleum licence shall, upon receipt by the Minister, be filed in the register of petroleum rights Ci) at least one party to the application is applications. qualified as an operator; and 37. Subject to sections 30 and 31 and upon payment of the Application Cii) the parties identify in the application, prescn'b edelee, a company or group 0f ' cornpames may apply to the for a petroleum the company which is both qualified and Minister for a petroleum licence and the application shall contain- licence. intended to act as the operator. Ca) the name of the company or group of (3) A company may, upon payment of the prescribed fee, companies applying for a licence, particulars apply to the Minister to qualify as an operator or a participant of incorporation and registration, the names and nationalities of directors, the share capital C4) Where the Minister is satisfied on the advice of the of the company or companies, and the name Directorate, that the applicant is suitable to qualify as an operator or of every person who is the beneficial owner a participant, as the case may be, he may issue to the applicant a of more than five per cent of the shares issued notice of qualification. by the company or companies; (5) A company qualified as an operator or a participant (b) an identification of the area to which the shall give written notice to the Minister as soon as practicable, application relates; regarding any material change in its status or financial or technical capabilities. Cc) the period for which the licence is required; (6) The Minister may cancel the qualification of a Cd) the minimum exploration operation company where- programme and expenditure proposed to be carried out in respect of the area to which the Ca) there is an adverse material change in the application relates, and the period within status of that company; or which the operations will be carried out; (b) the company or its representatives supply Ce) an assessment of the impact which the false or misleading infonnation or fails to proposed exploration operations may have supply material information, in respect of or on the environment; following the application for qualification.

28 No.7 Petroleum (Exploration andProduction) Act, 2011 No.7 Petroleum (Exploration andProduction) Act, 2011 (I) a plan for the prevention of pollution, the 39. The Minister may, following a transparent, fair and Grant of . . process and on the ad' competItIve VIce 0 f t he D'lrectorate, grant a petroleum licence. handling of wastes, the safeguard of the natural resources and minimization of the petroleum licence to two or more applicants who offered the most harmful effects of petroleum operations; favourable terms and conditions to the State. 40. (1) A petroleum licence granted by the Minister becomes Ratification (g) a description of the technical and industrial valid and binding on the parties only after ratification by Parliament. ~d pufblica- resources available to the applicant; two 0 a petroleum (2) Each petroleum licence, and any accompanying licence. (h) particulars of the financial resources available agreement between the State and the licensee providing details on to the applicant, including capital, credit the licence conditions attached to the licence, shall be published in facilities and guarantees including parent its entirety in the Gazette and in such other manner as may be company guarantees satisfactory to the prescribed. 11inister; 41. A petroleum licence shall indicate- Content of a petroleum (i) proposals with respect to the training and licence. employment of citizens of Sierra Leone; (a) the licensees and their respective participating interests in the licence; G) the applicant's proposals for insurance for (b) the name and particulars of the company petroleum operations, including accidental which has been approved to be the operator; death and health insurance cover for its employees; (c) the date ofregistration and the registration number of the licence; (k) any other matter which in the opinion of the applicant is relevant to the application; and (d) the date and term of the area under petroleum licence; (1) any other particulars as may be prescribed by the Minister. (e) the particulars ofthe petroleum licence; Notification 38. (1) The Minister shall cause the prospective licensees to (I) the terms and conditions upon which the of intention petroleum licence is granted; to grant a be notified in writing of his intention to grant them a petroleum licence petroleum and the conditions on which the licence will be granted. licence. (g) the date of registration and the registration number of the licence; (2) The prospective licensees shall within thirty days of receipt of the notification, notify the Minister of their willingness or (h) the minimum work programme to be otherwise, to accept the proposed licence. undertaken in the exploration period;

30 No.7 Petroleum (Exploration andProduction) Act, 2011 No.7 Petroleum (Exploration andProduction) Act, 2011 31 Ci) the estimated expenditure and financial (3) A petroleum licence may be extended only once and guarantees for the non-fulfilment of any part for a period not exceeding ten years and on the terms and conditions of the minimum work programme; and that the Minister may, on the advice of the Directorate, think fit. G) fees payable and other financial conditions (4) Notice of any extension approved under this section in accordance with this Act shall be published in the Gazelle and in such other manner as the Minister may prescribe. Rights 42. A petroleum licence shall confer on the licensee an exclusive conferIred by a right to undertake exploration and production within a licence area. 45. (I )Alicensee shall complete the minimum exploration work Minimum petro eum licence. programme for the initial period of exploration and any other exploration programme. extension. Term of a 43. (I) A petroleum licence shall be valid for a maximum period petroleum of thirty years from the effective date, unless sooner cancelled or (2) A licensee shall not amend the work programme licence. terminated as provided in this Act. without the approval of the Minister. (2) The petroleum licence shall comprise an exploration (3) The Minister shall not approve an amendment to a and production period. work programme if the 11inister, on the advice of the Directorate, is satisfied that there is sufficient evidence to conclude that continued (3) Subjectto this Act, the exploration period shall last a drilling activities in the licence area would not result in a discovery. maximum of seven years which shall be divided into an initial exploration period of three years, a first extension period and a second 46. (1) \\!here a licensee wishes to exercise its option to enter Extension of extension period of up to two years each. into the first extension period or the second extension period, it shall exp.lodration . . . . pcrlO. not later thanmnety days before the explratlOn of the relevant penod, C4) An exploration period shall commence on the effective submit to the Minister a request in writing for approval of such date of the petroleum licence. extension. Extension of 44. (I) A licensee may apply to the Minister for an extension (2) Every request made under subsection (I) shall a petroleum ofthe licence- contain- licence. Ca) upon payment ofthe prescribed handling fee; Ca) particulars of the actual operations carried and out, results from those operations and the amount expended in relation to those (b) not less than ninety days before the operations during the relevant period; expiration of a petroleum licence. (b) particulars identifying the licence area (2) An extension may only be granted where the Minister proposed to be relinquished in accordance is satisfied, on the advice of the Directorate that the licensee has with Section 49 and the area to be retained fully complied with this Act and the plan for development and by the licensee; and operation.

32 No.7 Petroleum (Exploration andProduction) Act, 2011 No.7 Petroleum (Exploration andProduction) Act, 2011 33 (c) any other matter which in the opinion of the (3) Subject to subsections (I) and (2) of section 46, the licensee is relevant to the application. quantum of each guarantee shall be equivalent to the estimated costs of the minimum exploration work programme for such period and the (3) The Minister shall grant an approval if after guarantee shall remain in effect for the duration of the stipulated consultation with the Directorate, he is satisfied that- period. (a) the licensee has fulfilled its minimum work (4) Where the licensee completes part of the minimum and expenditure obligations for the relevant exploration work programme, the 11inister may penn it the licensee to period; and reduce the guarantee by an amount equivalent to the expenses incurred in respect of the work completed for the stipulated period. (b) the licensee is not in breach of any provision of this Act (5) Upon completion of the minimum exploration work programme for a stipulated period, the Minister shall return the (4) The Minister may extend any first or second guarantee to the licensee. extension period after consultation with the Directorate, if he is satisfied that the reason for non-completion of the work programme (6) Where the licensee fails to complete the minimum within the prescribed sub-period justifies an extension; but the exploration work programme within the stipulated period, the Mirnster extension shall not exceed a period of six months and shall be subj ect may revoke the licence and enforce the guarantee. to the terms and conditions that the Minister may think fit 48. (I) A petroleum licence shall establish an area fee for the Licence area (5) If at the expiration of any sub-period of exploration licence area. annual fee. there is in progress an appraisal work programme with respect to a discovery, the Minister shall grant an additional extension of the (2) The area fee shall be payable on the grant of a relevant sub-period to enable the licensee to complete the approved petroleum licence and thereafter annually on the anniversary of the appraisal work within the period mentioned in paragraph (c) of grant until the termination of the licence. subsection (2) of section 51. (3) The area fee may increase at given intervals during Guarantee in 47. (I) Within sixty days of the effective date of a petroleum the production phase. respect of work pro- licence and in a form approved by the Minister, the licensee shall gramme. provide the Minister with a guarantee for fulfilment of the minimum (4) Where the licensee fails to pay the annual fee under exploration programme during the initial exploration period. subsection (I), the petroleum licence shall be revoked. (2) Upon the expiration of the initial exploration period 49. (I) A licensee shall relinquish the licence area as follows:- Relinquish- ment of and within sixty days of the date upon which the first extension licence area. period or the second extension period commences, the licensee shall (a) fifty percent of the initial licence area at the provide the Minister with a guarantee for the fulfilinent of the minimum expiration of three years after the effective exploration work programme during the first extension period or date of the licence; second extension period respectively and for any further extension.

34 No.7 Petroleum (Exploration andProduction) Act, 2011 No.7 Petroleum (Exploration andProduction) Act, 2011 35 (b) twenty five percent of the initial licence area (b) within seven days of tlie discovery, submit at the expiration of five years after the effective written particulars of the discovery to the date of tlie licence, or tlie expiry of the first Directorate, including identification of the extension period, whichever comes first; area where the discovery was made, the nature of tlie discovery and sucli otlier particulars Cc) tlie remainder of tlie licence area at tlie as the Directorate may require. expiration of tlie exploration period if tlie licensee lias by tlien not declared a (2) Tlie licensee sliall within sixty days of the discovery, commercial discovery; submit a report in writing to tlie Directorate stating wlietlier tlie discovery merits appraisal. Cd) wliere a discovery is declared commercial, tlie (3) A licensee wlio contravenes paragrapli Ca) of licensee sliall at tlie expiration of tlie subsection (1) commits an offence and sliall be liable on conviction exploration period relinquisli tliat portion of to a fine not exceeding Fifty Tliousand United States Dollars or its the licence area which is not covered by the equivalent in Leones. commercial discovery; 51. (1) \\!here a licensee reports that a discovery merits Appraisal Ce) subject to paragrapli Cd), if at the end of the appraisal, tlie licensee sliall, within ninety days of submission of tlie plan. initial exploration period or the first extension report referred to in subsection (2) of section 50, submit an appraisal period, as the case may be, a licensee elects plan to tlie Minister for approvaL not to enter into the first or second extension period, tlie licensee sliall relinquisli the entire (2) An appraisal plan sliall include a detailed appraisal licence area. work programme and corresponding budget and sliall specify- (2) An extension of any sub-period of exploration sliall Ca) tlie estimated size of tlie liydrocarbon not be construed as an extension of the obligation to relinquish. reserves of the discovery; (3) A licensee sliall, prior to relinquisliing an area, plug or (b) tlie area proposed to be designated as tlie close off all wells in tlie area to tlie satisfaction of tlie Directorate. appraisal area and sliall include all seismic, drilling, testing and other appraisal operations (4) A licensee wlio contravenes subsection (1) commits necessary to carry out an appropriate an offence and shall be liable on conviction to a fine not exceeding appraisal of tlie discovery; two Hundred and Fifty Tliousand United States Dollars or its equivalent in leones. Cc) a period not exceeding two years within wliicli the appraisal work programme is to be Discovery of 50. (1) Wlien a discovery is made, the licensee sliall- completed. petroleum. Ca) forthwitli and prior to informing a third party, (3) Tlie licensee sliall execute tlie minimum exploration inform tlie Minister oftlie discovery; and work programme in accordance with the approved appraisal plan.

36 No.7 Petroleum (Exploration andProduction) Act, 2011 No.7 Petroleum (Exploration andProduction) Act, 2011 37 (4) The licensee shall not amend the approved appraisal (d) a statement on whether, in the opinion of the plan without the prior approval of the Minister. licensee- (5) A licensee shall not be deemed to have completed its (i) the discovery is commercial; minimum work obligations under a minimum exploration work programme by virtue of undertaking an appraisal work programme. eii) the discovery is not commercial or; (6) A licensee who contravenes subsection (3) or (4) (iii) the discovery will be of eventual commits an offence and shall be liable on conviction to a fine not commercial interest. exceeding one Hundred Thousand United States Dollars or its equivalent in Leones. (3) If the licensee reports that the discovery is not commercial, the licensee shall relinquish the discovery area. (7) The Minister may revoke the approval of an appraisal work plan where the licensee contravenes subsection (3) or (4). (4) Within thirty days of the submission of the appraisal report declaring a discovery to be commercial, the Ministry shall Appraisal 52. (1) A licensee shall, within one hundred and twenty days report. notify the licensee whether the declaration of commerciality has been of completion of the appraisal work programme, as approved under approved, rejected or approved with modification. the appraisal plan, submit to the Minister a detailed report of the results of the appraisal work (5) If the Ministry does not notify the licensee in writing, of its decision during the thirty day period, the declaration will be (2) The appraisal report shall include- deemed to have been approved in its entirety. (a) all technical and economic data relevant to a PART VI-DEVELOPMENT AND PRODUCTION detennination of cornrnerciality, including geological and geophysical conditions such 53. A licensee that has fulfilled all its obligations as required in Entry into as structural configuration, physical the exploration phase and has received the Minister's approval for a prhoduction properties and the extent of reservoir rocks, . . hi p ase. declaration of cornrnerciality pursuant to the reqUIrements m t s areas, thickness and depth of pay zones, Act, shall have the right to enter into the production phase for the pressure, volume and temperature analysis remainder of the petroleum licence period and to retain that part of of the reservoir fluids; the licence area to which the declaration relates. (b) preliminary estimates of crude oil and natural 54. (1) Once a licensee's declaration of cornrnerciality has been Plan for gas reserves, recovery drive characteristics, .. approved by the 11imster, t h e l'lcensee sh a 11 prepare andsubmIt ' to and development anticipated production performance per the Minister for approval, a detailed plan for development and operation. reservoir and per well; operation of the petroleum field to which the discovery relates. (c) fluid characteristics, including gravity, sulphur percentage, sediment and water (2) The Minister may set a deadline for the submission of percentage; a plan.

38 No.7 Petroleum (Exploration andProduction) Act, 2011 No.7 Petroleum (Exploration andProduction) Act, 2011 39 (3) The plan for development and operation shall be (k) a long term production schedule, including accompanied by a social and environmental impact assessment to be the estimated start of production; approved in accordance with any relevant enactment. (1) a description of the petroleum field, the nature (4) A plan for development and operation shall be based and estimate of the quantity of the petroleum on engineering studies and shall include- in the field and any by-products and the estimated overall recovery of the petroleum; (a) a description and an illustrating map of the development area; (m) a description of technical solutions including possible solutions for enhanced recovery; (b) a description of the development strategy and concept; (n) a description of the capacities of the facilities; (c) an economic assessment of the different (0) solutions for efficient use of energy, and the developrnentrnethods and selection criteria; prevention and minimisation of environmentally harmful discharges and (d) where the development is planned in two or emISSIons; more phases, to the extent possible, the total development project; (P) methods for the disposal and use of associated gas where applicable; (e) a description of the links between the development of the production area and the (q) information on management systems, development of other petroleum fields, where including information on the planning, applicable; organisation and implementation of the development; (I) area studies for the possibility of co- ordination with other petroleum activities; (r) information on operation and maintenance; (g) proposed drilling and well completion plans; (s) a detailed forecast of capital investment, operating costs and income from sales and a (h) geological parameters and reservoir financing plan for the development; engineering methodology; (t) a health and safety assessment; (i) a description of facilities for production, storage, transportation and delivery of (u) insurance strategy for petroleum operations, petroleum; including life and health cover for licensee's employees; G) a development schedule;

40 No.7 Petroleum (Exploration andProduction) Act, 2011 No.7 Petroleum (Exploration andProduction) Act, 2011 41 (v) emergency preparedness plans; (2) The licensee shall immediately notify the Minister in writing of any significant deviation from the assumptions and (w) a preliminary plan for end of production, preconditions on which a plan for development and operation has decommissioning and disposal of facilities; been submitted or approved, and any significant alteration of facilities or use of facilities. (y) information on any applications for petroleum rights and authorisation required under the (3) Any deviations or alterations to the plan for applicable enactment in connection with the development and operation or significant alterations to the facilities planned petroleum operations. shall require the prior written approval of the Minister. Plan for 55. (I) A plan for development and operation shall become (4) The Minister may require a new or amended plan for development and operation effective upon the written approval of the Minister on the advice of development and operation to be submitted prior to the approval of to be the Directorate. any deviation or alteration, or require amendments to an approved effective on plan where it is necessary for efficient production or in the public approval. (2) Approval of a plan for development and operation- interest. (a) may be limited to the development of (5) A licensee who contravenes subsection (I), (2) or (3) individual reservoirs or phases; commits an offence and shall be liable on conviction to a fine not exceeding two hundred and fifty thoudand United States Dollars or (b) may be subjectto requirements for additional its equivalent in Leones. capacities, additional resources or third party access; and (6) The licensee's proposals for the procurement of goods and services obtainable within the country shall be in accordance (c) may be subject to such other conditions as with the local content policy of the State. may be determined by the Minister on the advice of the Directorate. (7) The licensee shall have adequate insurance cover for its employees. (3) The Minister may, on the advice of the Directorate, revise the long term production schedule earlier approved, if warranted 57. (I) A plan for development and operation submitted Restrictions by resource management considerations or other significant socio- under section 54 shall be approved by the Minister only if- ~~ pal~~r~~ral economic considerations, and the 11inister may in this connection development prescribe the use of improved recovery methods. (a) the plan will ensure the most efficient, and . beneficial and timely conduct of the operatIOn. Execution of 56. (I) Unless otherwise determined by the Minister, a petroleum operations concerned; plan for development. licensee shall not enter into contracts of significant value or commence construction works without written approval of the plan for (b) the plan takes proper account of best development and operations by the Minister. petroleum industry practice and safety factors;

42 No.7 Petroleum (Exploration andProduction) Act, 2011 No.7 Petroleum (Exploration andProduction) Act, 2011 43 (c) the licensee continues to have the requisite (3) Where the licensee has made the necessary and experience to carry out effective development appropriate amendments to the proposed plan before the date set and production operations; out in the notice in subsection (2), or otherwise dealt satisfactorily with the matters referred to in the notice, the 11inister shall reconsider (d) the licensee's descriptions and proposals under subsection (3) of section 54 are the plan for development and operation. satisfactory to the Minister on the advice of the Environmental Protection Agency; (4) Where the licensee does not submit a plan for development and operation within the prescribed time limit or has (e) the licensee undertakes to comply with the not satisfactorily availed itself of the opportunity referred to in conditions on which a plan for development subsection (2), the licensee shall relinquish the area which is the and operation will be granted; subject of the proposed plan for development and operation. (I) the licensee's proposals for the employment and training of citizens of Sierra Leone are (5) Where a proposed plan for development and operation satisfactory; is not approved by the Minister, the licensee shall relinquish the area covered by the proposed plan. (g) the licensee's proposals for the procurement of goods and services obtainable within the 58. (1) Alicensee shall submit to the Minister for approval, a Amendment country are in accordance with the local . dp Ianelor d reVIse I an eve oprnent d ' at any tIme operatIOn . to ta k'e mto of plan for development content policy of the Government; account, any changes in circumstances which, in accordance with and best petroleum industry practice, require changes in the scope, cost operation. Q1) the licensee has adequate insurance cover or other attributes of the plan. for petroleum operations and its employees; (2) Where the Minister extends the period of a petroleum (i) a social and environmental impact licence, the licensee shall amend the plan for development and assessment for the development area has operation to take into account the petroleum operations to be been approved in accordance with the undertaken during the extension period. Enviromnental ProtectionAct 2008; and AetNo.II of 2008. G) the licensee has complied with the relevant (3) Unless the Minister decides otherwise, the licensee provisions of this Act. shall not continue production activities in the extension period until the amended plan for development and operation is approved by the (2) Where the Minister, on the advice of the Directorate, Minister. is not satisfied with the proposed plan for development and operation, he shall notify the licensee in writing, stating his reasons, and shall (4) A licensee that fails to comply with any requirement afford the licensee an opportunity to make, within such period as under this section commits an offence and shall be liable to an may be specified in the notice, representations in relation to all matters administrative penalty not exceeding One Hundred Thousand United concerned and to present proposals for amendments to the plan. States Dollars or its equivalent in Leones.

44 No.7 Petroleum (Exploration andProduction) Act, 2011 No.7 Petroleum (Exploration andProduction) Act, 2011 45 (5) The Minister may, on the advice of the Directorate (a) a petroleum reservoir extends beyond the and after consultation with the licensee, amend by written notice, an boundaries of a petroleum licence area into approved plan for development and operation, where the amendment one or more areas subject to a petroleum is necessary for safe, appropriate or efficient production or in the licence or licenses, as the case may be; and public interest (b) the Minister establishes, on the advice of Postponement 59. (1) Where significant public interests so require, the the Directorate and after consultation with ~e~~~elop- 11inister may, after consultations with the licensee, postpone the the relevant licensees, that the j oint deve- development of a field. lopment of several petroleum accumulations would be more efficient and advantageous, (2) In the event of a postponement under subsection (1), the term ofthe petroleum licence shall be extended for the period of the relevant licensees shall, within the time limit prescribed by the postponement, and the obligation to pay licence area fees during Minister, prepare and submit to the Minister for approval, a plan for that period shall be suspended. joint development and operation for the petroleum reservoir or accumulations in accordance with section 54. Prudent 60. (1) The licensee shall conduct petroleum operations m operations. accordance with best international techniques and practices and (2) (a) Where a petroleum reservoir extends beyond the sound economic principles and in a manner that will- boundaries of a petroleum licence area into an area not subject to a petroleum licence, the Minister shall grant a petroleum licence to the (a) ensure maximum recovery of petroleum in National Company for the area covering the part of the reservoir each individual or several combined which is not already the subject of a petroleum licence and the licensee petroleum accumulations; shall, within the prescribed time limit, prepare and submit to the (b) minimize pollution and the effect of petroleum Minister for approval a plan for joint development and operation of operations on land adjoining or adjacent to the petroleum reservoir in accordance with section 54. the production area; (3) The existing petroleum licence will be modified to (c) safeguard natural resources, particularly incorporate the areas proposed for joint development. fishery resources; and (4) Where a plan for joint development and operation (d) ensure that wastage of petroleum or reservoir has not been submitted within the time limit prescribed under energy is avoided. subsection (1) or (2), the Mimstermay, on the advice ofthe Directorate, give directives to the relevant licensees regarding the joint (2) The licensee shall carry out continuous evaluation of development and operation of the petroleum reservoir or production strategy and technical solutions for optimal development accumulations. and production of petroleum. (5) An agreement for joint development of a petroleum Joint develop- 61. (1) Where- ment. reservoir or accumulations shall be negotiated by the relevant licensees.

46 No.7 Petroleum (Exploration andProduction) Act, 2011 No.7 Petroleum (Exploration andProduction) Act, 2011 47 (6) Where, within ninety days ofreceipt ofthe Minister's (2) Nothing in this section, or in any directive given under directives, the parties fail to reach agreement for joint development this section, requires the licensee to do anything which is not in of the petroleum reservoir or accumulations, the 11inister may instruct accordance with best available international techniques and practices the parties to commence a [onnal process for dispute resolution. and sound economic principles. (7) Where agreement is not reached within one hundred 64. (1) A licensee shall measure or weigh by a method Measurement and twenty days of commencement of a formal dispute resolution customarily used in best oil field practices, and from time to time of p~trodleum b process, the Minister may set the terms for and enforce a joint .. approve d by the Mmlster, a 11 petro1eum recovere d f rom a 1·lcence 0 tame. development agreement between the parties. area. Cross border (2) The Minister shall prescribe the equipment, methods 62. (1) Where a petroleum reservoir extends into the territory petroleum and standards to be applied for measurement of petroleum for operations. or continental shelf of another slate, the Slate shall seek to reach resource management, operational, economic and fiscal purposes. agreement with that state for the most efficient coordination of petroleum operations in connection with the petroleum reserVOIr (3) A licensee shall not make any alteration in the method and the apportionment of the petroleum reserves. of measurement or weighing in any equipment used for that purpose without the prior consent in writing of the Minister, and the Minister (2) Where the construction and operation of a petroleum may in any case require that no alteration shall be made except in the facility extends to another state, efforts shall be made to reach presence of a person authorised by him. agreement on the most efficient way of coordinating the use of the facility. (4) The Minister may, from time to time, direct that any weighing or measuring equipment be tested or examined in a manner, Directives for 63. (1) Where- upon occasions or at intervals, and by means specified in the directive. recovery of petroleum. (a) petroleum is not being recovered in a (5) The licensee shall ensure that there is regular development area and the Minister is maintenance and recalibration of the equipment. satisfied that there is recoverable petroleum in that area; or (6) Where the equipment and appliances used for measurement of petroleum is found to be defective, such defection (b) where petroleum is being recovered in a shall be deemed to occur from date of the last inspection. development area at a reduced rate; (7) Where the inspection reveals that the equipment is the Minister may instruct the licensee to take all necessary and defective, the Minister shall by notice to the licensee direct the practicable steps to recover the petroleum in accordance with this licensee to properly maintain or recalibrate the equipment as the case Act, or as the case may be, to increase the rate at which the petroleum may be, within such time as the Minister may determine. is being recovered to a rate not exceeding such capacity as may be (8) If the licensee fails to comply with the direction of the specified. Minister within the stipulated time, the Minister shall require the licensee to give reasons for the failure to so comply with the directions within seven days of the requirement

48 No.7 Petroleum (Exploration andProduction) Act, 2011 No.7 Petroleum (Exploration andProduction) Act, 2011 49 (9) A licensee who fails to comply with subsection (8) 69. (1) In the event of war, threat of war, natural disaster or Supplies in commits an offence and shall be liable on conviction to a fine not · oth er extraor d mary .. t he M'mIster cnSIS, . may, WI·th the approvaI 0f t he war, the event of threat of exceeding fifty thousand United States dollars or its equivalent in President, direct licensees to place petroleum at the disposal of the war, other leones. State in such proportions as the 11inister may detennine, without crisis. discriminating against any licensee. Inspection 65. The Minister may authorise any qualified public officer to and sampling enter any facility where petroleum is being produced or stored and (2) The price paid for the petroleum delivered under this of petroleum. inspect or take samples for testing of any petroleum products found section shall be agreed by the parties. in that facility and the cost of the test shall be borne by the licensee. 70. A licensee shall have the right to use natural gas produced Use of natural Purpose of 66. A licensee shall submit to the Minister on a monthly basis, in petroleum operations as prescribed and in accordance with an gas. inspection and sampling. infonnation pertaining to- approved plan for development and operation if the use is in accordance with best petroleum industry practice, including- Ca) the volume of petroleum produced, the composition of the petroleum, including test (a) re-injection in a reservoir for increased production and the extraction of petroleum pressure or pressure maintenance for the in connection with formation testing; purpose of extracting more oil from the (b) the use, injection, cold venting and burning reservoir; and of petroleum based as far as possible, on (b) power generation. metering; and Cc) the volumes and other results of monitoring 71. (1) A licensee shall not vent or flare natural gas unless Restrictions as well as monitoring procedure. authorised by the Minister under the following circumstances:- on fl.aringfand ventmg 0 natural gas. Property in 67. (1) The title to petroleum produced shall pass to the Ca) during production testing operations; petroleum passes to licensee at the well head. licensee at (b) when necessary for the safety of petroleum wellhead. (2) The licensee shall be liable for any damage caused by operations in accordance with best petroleum spills or in respect of petroleum produced in the licence area. industry practice; and (3) Notwithstanding subsection (1), any loss of petroleum Cc) where re-injection is incompatible with good before it reaches the well head shall be attributed to the licensee. reservoir or petroleum engineering practice Supplies to 68. (1) The Minister may direct the licensee to make and the Minister, on the advice of the cover deliveries from the licensee's production to cover national requirements Directorate, is satisfied that there are no other national means of utilizing the gas. requirements. and may further direct to whom the petroleum shall be delivered. (2) The price paid for the petroleum delivered under this (2) In the case of an emergency, a licensee may undertake section shall be agreed by the parties which shall be at fair market flaring or venting of gas under subsection (1) without the prior value. approval of the Minister but the licensee shall ensure that those

50 No.7 Petroleum (Exploration andProduction) Act, 2011 No.7 Petroleum (Exploration andProduction) Act, 2011 51 activities are kept at the lowest possible level and shall immediately shall inform the parties within sixty days of receipt of an application inform the Minister of the emergency and seek the approval of the and shall determine the information required and the mode and 11inister for any continued flaring or venting. deadline for submission of the information. (3) All facilities shall be planned and constructed so as 75. If the 11inister determines that compensation is warranted Amount of to avoid any gas venting or flaring under normal operating conditions. under section 74, the amount of compensation payable shall be compensation determined by agreement between the parties concerned, but if the Right to enter 72. Subject to sections 73 and 74, and any regulations as may land. parties are unable to reach agreement on the amount of compensation, be prescribed, a licensee, holder of a permit for the laying and the matter shall be referred to the Minister who shall determine the operation of a pipeline, contractor or sub-contractor shall have the amount payable. right to enter upon any land to carry out petroleum operations as pennitted under a reconnaissance pennit or a petroleum licence 76. (1) The Minister may on specific conditions and for a Permit for Notice to fixed period grant to companies with the required technological laying .and f 73. (I) All persons having title to or an interest in land on operatIOn 0 owners or which operations under a reconnaissance permit or a petroleum experience and financial capacity a separate pennit to install and pipelines. occupiers of operate pipelines referred to in paragraph (c) of section 15. land. licence are to be conducted, shall not allow a permit holder, licensee, contractor or sub-contractor to enter the land to commence the operations, without prior written notification of the purpose, nature (2) Application for a permit shall be submitted to the and location of the proposed operations. Minister and shall contain a plan for construction, placing, operation and use of such pipeline. (2) Subject to subsection(1), any person having title to or an interest in the land on which operations under a reconnaissance (3) The relevant provisions that apply to a licence, penn it or a licence are to be conducted, who suffers a loss or damage licensee and petroleum operations shall apply correspondingly to as a result of the operations shall be entitled to such compensation the pipeline and the holder of the permit, unless the Minister decides as may be determined by law. otherwise. Right to 74. (I) Where any person having title to or an interest in (4) The permit period may be extended by the Minister. compensation. land upon which a pennit holder, licensee, contractor or sub-contractor has conducted operations, suffers any disturbance, loss or damage PART VIII-DECOMMISSIONING to surface rights, buildings, works or improvements, livestock, crops and trees, as a result of the operations, the person shall apply to the 77. (I) Subject to section 54 and within not less than ninety Decommis- 11inister for compensation. days prior to the surrender or revocation of a licence and before sioning plan. petroleum operations on a facility are pennanently terminated, the (2) The Minister shall make a determination of the validity licensee shall submit the decommissioning plan for the prior written of the right that the applicant has to compensation within sixty days approval by the Minister, on the advice of the Directorate. of receipt of an application, taking into account the extent of the disturbance or damage to the applicant's land or property. (2) The decommissioning plan shall include information and evaluations necessary for the 11inister to decide whether to (3) If the Minister requires additional information from approve the plan, including proposals for the following:- either party in order to make a determination under subsection (2), he

52 No.7 Petroleum (Exploration andProduction) Act, 2011 No.7 Petroleum (Exploration andProduction) Act, 2011 53 (a) continued production; (8) A licensee wlio undertakes decommissioning activities in contravention of this section, commits an offence and shall be (b) sliutdown of production; liable on conviction to a fine not exceeding One Hundred Thousand United States Dollars or its equivalent in Leones, (c) disposal of facilities; and 78. (1) Tliere sliall be establislied by tlie Minister, after Decommis- (d) tlie reliabilitation of tlie land, , consu ItatlOn 'li t li e M'mIster WIt , responSl'bl e f or f'mance a slOnmg Fund . Decommissioning Fund. (3) Wliere tlie decommissioning plan lias been approved by the Minister under subsection (1), any revision or amendments to (2) Tlie Minister and tlie licensee sliall agree upon tlie it sliall be subject to approval by tlie Minister, on tlie advice of tlie amount of the Decommissioning Fund necessary to fund activities Directorate. under the approved decommissioning plan and the manner in and time at wliicli tlie licensee sliall make contributions to tlie Fund but (4) Subj ect to section 54 and at any point after tlie approval the first contribution shall not be made prior to commencement of of a plan for development and operation pursuant to section 54, tlie production. 11inister may require further infonnation and evaluations or a revised plan for development and operation, inclusive of a revised (3) Tlie Decommissioning Fund sliall be used only for decommissioning plan, subsequent to which the 11inister shall issue decommissioning directives or conditions for decommissioning, on the advice of the Directorate. (4) Tlie Minister sliall establisli an interest bearing escrow bank account in a currency agreed on by tlie parties for tlie purpose (5) A licensee sliall comply witli any obligations witli of depositing contributions to the Decommissioning Fund or based respect to decommissioning under this Act and any other enactment on the joint determination by the parties and the Government, a and directives relating to decommissioning, notwithstanding that suitable bank sliall be selected to act as an escrow agent to operate tlie obligations may take place subsequent to tlie expiration of tlie the Decommissioning Fund. petroleum licence. (5) Tlie licensee sliall, in accordance witli tlie agreement (6) Unless otlierwise directed by tlie Minister and upon pursuant to subsection (2), submit contributions to tlie tlie transfer of ownersliip of any facility under a petroleum licence, Decommissioning Fund to the escrow account and shall notify the all obligations, any directives relating to the maintenance and Minister promptly upon tlie deposit of funds into tlie account. decommissioning of tlie facility sliall be carried out jointly or separately, as agreed between tlie parties, (6) Wliere tlie monies in tlie Decommissioning Fund are insufficient to cover the implementation of the decommissioning plan, (7) Where the maintenance or decommissioning of a tlie licensee, and wliere applicable, tlie owner of tlie facilities sliall be facility is not carried out in accordance with this Act or directives of liable for tlie sliortfalL tlie Minister witliin tlie stipulated time, tlie Minister may take necessary measures on behalf of the licensee, and for the licensee's (1) Tlie licensee sliall provide tlie Minister witli a account and risk. guarantee in a fonn satisfactory to the Minister and in such sum as

54 No.7 Petroleum (Exploration andProduction) Act, 2011 No.7 Petroleum (Exploration andProduction) Act, 2011 55 agreed between the Minister and the licensee, in respect of any 80. If the licensee does not carry out the decommissioning Removal and shortfall which may accrue between the amount of the pursuant to h . . . p1an and t he sale A t h e approve d decornrnlsslOmng teet, [0 of eft b Decommissioning Fund and the actual cost of decommissioning Minister's directives, the Minister may dispose of any installation PMi~st~. ihe operations. pursuant to the approved decommissioning plan at the cost of the licensee. (8) The Decommissioning Fund shall be jointly managed by the Minister and the licensee. 81. (1) A licensee or an owner other than the licensee who is Liability for under the obligation to decommission a facility under section 77 is dd~agels "for (9) The Minister shall- . . . . . . lsposa 0 lIable for damage or mconvemence caused m connectIOn wIth the decommi~ioned (a) release to the licensee such amounts from disposal of the facility. facility. the Decommissioning Fund as are necessary (2) Where the licensee or owner abandons a facility, the to meet the costs and expenses of the licensee or owner is liable for damage caused in connection with the decommissioning operations; and abandoned facility. (b) retain any amounts that remain in the (3) Where there is more than one party liable under Decommissioning Fund, to the extent that the subsection (1) or (2), they shall be jointly and severally liable for all contributions made by the licensee to the financial obligations. Fund have been set off against the tax payable by the licensee pursuant to the applicable (4) In the event that a decision has been taken for the law on taxation. abandomnent of a facility which is to be taken over by the State, the licensee and any owner other than the licensee shall reach an (10) Where a licensee fails to decommission in accordance agreement with the State on the future maintenance, responsibility with the approved decommissioning plan, the Minister may retain and liability and any financial compensation payable to the State. the whole or part of the Decommissioning Fund under a procedure prescribed in regulations. 82. Where the Government requires the removal of a facility, Encum- any lien, charge or encumbrance on the facility shall lapse except brances. (11) A licensee who fails to decommission in accordance otherwise allowed by the Minister. with this Act commits an offence and shall be liable on conviction to a fine not exceeding Two Hundred Thousand United States Dollars 83. (1) The State may take over the facilities of a licensee or Take over of . clor the 1· a h0 lder 0 f a pennit aymg and operatIOn . 0 f a pIpe . 1·me wh en- facilities by or its equivalent in Leones. the State. (a) the licence or the permit expires or IS Decommis- 79. Notwithstanding section 77, where the State exercises its sioning by the right to take over the petroleum facilities pursuant to section 83, the cancelled; State. 11inister shall be responsible for decommissioning in respect of any (b) where the costs of the licensee or the holder petroleum facility so taken over, subject to an agreement between of the permit have been fully recovered; or the Minister and the licensee on the distribution of the decommissioning costs. (c) when the use of the facility has been terminated permanently.

56 No.7 Petroleum (Exploration andProduction) Act, 2011 No.7 Petroleum (Exploration andProduction) Act, 2011 57 (2) In the event of takeover of a facility subject to private (4) Notwitlistanding subsection (3), tlie National property interests, compensation shall be paid wliere required by law Company shall retain an amount not exceeding twenty five percent and in accordance with the prescribed procedure, if any. of total revenues received in any financial year to meet its operational, administrative and investment requirements for that year, subject to (3) Wliere the Govermnent lias confirmed tliat it wislies submission of an annual cost plan to the Minister and to Parliament. to exercise its option to take over a facility, tlie takeover shall be effective six months after expiration of the licence or the pennit or after termination oftlie use of the facility, unless otherwise determined (5) Retention of the total amount of revenues received in by tlie Minister. excess oftlie percentage stipulated in subsection (4) sliall be subject to the prior written approval by tlie Minister responsible for finance. (4) Wliere tlie Govermnent elects to keep the facilities in order to continue petroleum operations after the withdrawal of the (6) Tlie National Company sliall keep and maintain licensee or tlie liolder of tlie permit, tlie Decommissioning Fund separate accounts in respect of revenues and expenses relating to togetlier witli tlie related interest sliall be at tlie Minister's disposal to the participating interests of the State in each petroleum licence. cover the later decommissioning and the licensee or the holder of the permit sliall be released from any further decommissioning liability in respect of tlie facilities. 85. Where the State elects to participate in a petroleum licence, Participating ... 1carne . sliallliave an mitIa It . d'mterest 0 f at 1east ten percent and may interest . (5) Wliere tlie State takes over a facility, tlie facility witli acquire an additional paying interest up to a declared maximum within its accessories shall be in such condition as adequate maintenance a specified period of time from tlie date a discovery is declared to be to ensure functional capability for petroleum operations would commercial discovery. reqUITe. (6) Any dispute arising under subsection (4) and, wliere 86. A petroleum licence shall provide that a licensee wishing Right of first . se 11 or transler to assIgn, c· Its·mterest wlietler i 'm part or .m li woe 1 li s11a refusal · applicable, regarding the compensation to be paid to tlie State for lack of maintenance, shall be determined by appraisement. give the riglit of first refusal to the State to acquire the interest at tlie same price as agreed with a potential purchaser. PART IX-STATE PARTICIPATION PART X-EMPLOYMENT AND LOCAL CONTENT State 84. (1) Tlie State may participate as a licensee witli a specific participation participating interest in a petroleum licence under the auspices of the in petroleum 87. (1) Tlie licensee, its contractors and sub-contractors shall Employment operations. National Company. .. ..c 1 . li . and training ensure that opportunItIes are gIVen lor emp oyment m t e vanous of Sierra levels of their organisations and operations to adequately qualified Leoneans. (2) Tlie National Company sliall have all the riglits and citizens of Sierra Leone. obligations of a licensee under tliis Act and tlie joint operating agreements to whicli it is a party. (2) Tlie licensee, its contractors and sub-contractors shall (3) Tlie revenue resulting from the management of the not engage in discriminatory practices on grounds of race, nationality participating interests shall belong to tlie State. or gender in the conditions of service provided for personnel.

58 No.7 Petroleum (Exploration andProduction) Act, 2011 No.7 Petroleum (Exploration andProduction) Act, 2011 59 (3) The licensee, its contractors and sub-contractors shall 90. A licensee, its contractors and sub-contractors shall prepare Technology prepare and implement plans and programmes to train citizens of and implement such plans for the transfer to employees of the National Transfer. Sierra Leone in all aspects of petroleum operations in consultation Company of advanced technological know-how and skills related to with the National Company, to enable them to qualify for positions petroleum operations as shall be agreed with the Minister. relating to petroleum operations. PART XI-ENVIRONMENT, HEALTH AND SAFETY Preference 88. (1) The licensee and its contractors and sub-contractors for local shall give preference to services, materials, consurnables and other 91. (1) The Government shall introduce and enforce Environment goods. goods produced in Sierra Leone or provided by Sierra Leonean integrated health, safety and environmental quality management an~ ai.r quality emiSSIOns. companies or suppliers where the quality and time of delivery of the systems with specific quality, effluent and emission targets for oil goods and services are comparable to those available internationally. and gas related pollutants, without regard for fuel type such as gas, liquid or solid, in order to ensure compliance with best practices in (2) The Sierra Leonean companies or supplies referred the international petroleum industry. to in subsection (1) shall- (2) The licensee shall prepare and execute plans of a (a) have adequate resources and capacity to add preventive nature, to guarantee the protection, conservation and value to the petroleum operations carried out restoration of the environment affected by petroleum operations and by the licensee; and adopt and implement specific contingency plans to attend to emergencies and repair damage in the most efficient and timely way (b) be subject to approval by the Minister in possible. accordance with prescribed criteria. (3) No holder of a petroleum right shall commence (3) Within sixty days after the end of each calendar year, petroleum operations without the approval of its the licensee shall provide the Minister with a report of its achievements environmental impact assessment and an environ- and its contractors and sub contractors' achievements in utilizing the mental management plan and the issuance of a licence goods and services referred to in subsection (1) during that calendar required under the Environment Protection Agency AetNo.II year. of 2008. Act, 2008. (4) The report shall be published in the Gazette and in (4) In preparing the environmental impact assessment such other manner as may be determined by the Minister. under subsection (3), a holder of a petroleum right shall hold consultations with representatives of local communities or citizens Training, 89. (1) There is hereby established the Training, Research at risk of suffering social, environmental or economic disruption as a Research and and Development Fund which shall be managed by the Minister. result of petroleum operations. Development Funds. (2) Every licensee shall pay into the Training, Research (5) The environmental impact assessment and and Development Fund, an annual training, research and development environmental management plan shall be published in the Gazette fee as may be provided in the petroleum licence. and in such other manner as may be determined by the Minister after consulting the Environmental Protection Agency.

6J No.7 Petroleum (Exploration andProduction) Act, 2011 No.7 Petroleum (Exploration andProduction) Act, 2011 61 (6) Failure by the licensee to comply with any of the (a) the scope of the activity; obligations under this section shall be a cause for the suspension of the petroleum right until the obligations are fulfilled to the satisfaction (b) the situation of the party that has sustained ofthe Minister. the damage; and (7) The holder of a petroleum right shall ensure that (c) the opportunity for taking out insurance by necessary measures are taken to prevent or reduce hannful effects, the parties. including the measures required in order, to the extent possible, to (6) Where pollution damage occurs in the course of return the environment to the condition it had been in before the petroleum operations which have been conducted without a occurrence of an environmental damage. petroleum right, the person who conducted those operations and (8) The Govermnent shall take all such reasonable steps any person who participated in those operations, knowing or who as may be necessary to honour its international obligations relating ought to have known that the operations were being conducted to the enviromnent, health and safety. without a petroleum right, shall be liable for the damage. Liable party 92. (I) The holder of a petroleum right shall be liable for 93. A holder of a petroleum right carrying out petroleum Pollution or and extent of pollution damage related to its petroleum operations without regard operations shall be responsible for any pollution or damage caused damtagetb y liability. con rae or. to fault and where the holders are more than one, they shall all be by or resulting from the operations as well as pollution or damage liable in proportion to their participating interest. caused by or resulting from petroleum operations undertaken by a contractor, sub-contractor or employee of the holder and shall take (2) Claims for compensation for pollution damage shall all necessary measures to remedy any pollution or damage so caused. initially be directed to the operator.

94 Liability for pollution may be claimed in accordance with Claim of (3) Where the operator fails to pay any part of the this Act or any other applicable law. damages. compensation, the unpaid amount shall be directed to the other holders of the petroleum right in proportion to their respective participating 95. Legal action for compensation for pollution damage shall Jurisdiction. interests. be brought before the court in the jurisdiction where- (4) Where any of the holders of a petroleum right fails to (a) the petroleum operations have taken place pay its share of the damage as apportioned under subsection (3), the or where damage has been caused; or unpaid amount shall be divided among the other holders in proportion (b) the place of incorporation of the holder of to their respective participating interests. the petroleum right. (5) Where it is demonstrated that an inevitable event of 96. (I) A holder of a petroleum right carrying out petroleum Provision for nature, act of war, exercise of public authority or a similar force majeure operations shall maintain at the work site, an establishment capable safety. event has contributed to a considerable degree to the damage or its of dealing adequately with fire, oil spills, blowouts and other accidents extent under circumstances which are beyond the control of the liable or emergency situations which may arise from petroleum operations party, the liability may be reduced to a reasonable extent, with particular so as to prevent or control such situations and to minimize loss or consideration given to- damage from them.

62 No.7 Petroleum (Exploration andProduction) Act, 2011 No.7 Petroleum (Exploration andProduction) Act, 2011 63 (2) The Environmental ProtectionAgency may prescribe (2) A holder of a petroleum right shall place facilities at minimum safety and health requirements to be maintained at a the disposal of public authorities for emergency and security drills petroleum facility or establishment and shall, where necessary, participate in the drills provided that petroleum operations are not unduly interrupted. Safety 97. An operator, contractor or sub-contractor- precautions. (3) The Minister after consultation with the Ca) shall take precautions as are necessary to- Environmental Protection Agency may issue guidelines for the implementation of the measures referred to in subsections (1) and (2). Ci) ensure the safety of any person employed or othervvise present at or in 100. (I) There shall be a safety zone surrounding every facility Safety zones. the vicinity of an installation or facility carrying out petroleum operations, unless othervvise determined by and the Minister. Cii) protect the environment and natural resources, including taking precautions (2) The Minister may in cases of accidents and to prevent pollution; and emergencies, establish or extend the safety zones under subsection (I). (b) shall ensure that the persons referred to in paragraph Ca) are duly informed of those (3) The extent of zones referred to in subsections (1) and precautions. (2) shall be determined by the Minister in collaboration with the Sierra Leone J\![aritime Administration and where a proposed safety zone General 98. (I) A holder of a petroleum right shall, at all times maintain extends across the border line with another state, the Minister shall requirements efficient emergency preparedness with a view to dealing with accidents consult the Minister responsible for foreign affairs and the Attomey- for emer- gency pre- and emergencies which may lead to loss of life or personal injury, General and Minister of Justice before making a determination. paredness. pollution or major damage to property. C4) The Minister may direct that- (2) A holder of a petroleum right shall ensure that necessary measures are taken to prevent or reduce harmful effects, Ca) a zone corresponding to the safety zone shall including the measures required in order, to the extent possible, to be established in reasonable time before the return the environment to the condition it had been in before the placing of facilities as mentioned in accident occurred. subsection (1); or (3) The Minister may after consultation with the (b) there shall be a safety zone around and above Environmental Protection Agency issue directives for the abandoned or dumped facilities, or parts of implementation of the measures referred to in subsection (I). the facilities. Emergency 99. (I) A holder of a petroleum right shall imtiate and maintain preparedness (5) Unauthorised vessels, vehicles, crafts, fishing gear against security measures to prevent or minimize attacks against facilities or other objects shall not be present in zones mentioned in this deliberate and shall at all times have contingency plans to deal with such attacks. attacks. section.

64 No.7 Petroleum (Exploration andProduction) Act, 2011 No.7 Petroleum (Exploration andProduction) Act, 2011 65 Suspension of 101. (I) Where accidents and emergencies referred to in (b) area fees as prescribed; petroleum operations, section 98 occur, the holder of the petroleum right shall, to the extent etc. necessary, suspend the petroleum operations for as long as the Act No.8 (c) personal income tax as prescribed in the requirement for prudent operations warrants. of 2000 Income TaxAct 2000; (2) In emergency situations, the Minister may on the Act No.8 (d) corporate tax as prescribed in the advice of the Environment Protection Agency direct that petroleum of 2000 Income TaxAct 2000; operations be suspended to the extent necessary, or may impose particular conditions to allow continuation of the operations. Cap 271 (e) customs duties as prescribed in the Commission 102. \\!here a serious accident occurs including loss of life or Customs Act; and of inquiry. major damage to property or pollution of the environment, in connection with petroleum operations, the President may appoint a Act No.8 (I) a special petroleum tax to be known as commission of inquiry in accordance with the Constitution of Sierra of 2000 the Petroleum Resources Rent Tax as Act No.6 Leone to inquire into the causes of the pollution and make such prescribed in the Income Tax Act, 2000. of 1991 recommendations as are appropriate. 105. Payments made to the State under this Act shall be disclosed Disclosure of Application 103. (I) This Part applies to liability for pollution damagefrom according to the tenns and procedures of the Sierra Leone Extractive rha~~ta~~~ to of Part. a facility when the damage occurs in Sierra Leone or affects a Sierra Industries Transparency Initiative. Leonean vessel or a Sierra Leonean facility adjacent to where petroleum operations are being conducted. 106. The fair market value on petroleum produced and saved Market value shall be as provided under the tenns and conditions of the petroleum on petroleum. (2) The Minister may, notwithstanding the provisions of this Act, by agreement with a foreign state, prescribe rules relating to licence. liability for pollution damage caused by petroleum operations. 107. (I) Upon notice to the licensee, the State may elect to Royalty (3) Rules made under subsection (2) shall not restrict the receive its royalty payment in kind in crude oil or gas with respect to k~~ent in right to compensation according to this Act in respect of any injured the fair market value thereof party under Sierra Leonean jurisdiction. (2) The State shall give at least ninety days notice in PART XII-FINANCIAL PROVISIONS advance of each lifting period to the licensee when royalty is required in kind. Royalty and 104. Notwithstanding the provisions of any other enactment taxes. holders of petroleum rights shall be liable for the following taxes without limitation- (3) The Minister may instruct the licensee to undertake transportation and storage of royalty petroleum paid in kind on (a) royalties payable to the State, as tenns and priority which are no less favourable than for the licensee's Act No.8 of 2000 prescribed in the Income Tax Act 2000; own petroleum from the relevant licence area. No.7 Petroleum (Exploration andProduction) Act, 2011 No.7 Petroleum (Exploration andProduction) Act, 2011 Area fees. 108. There shall be payable to the State by the licensee, minimum PART XIII-ARBITRATION annual fees per square kilometre of licence area at the beginning of each calender year, in the amounts prescribed in regulations. 113. (1) Any dispute arising between the State on one hand Arbitration. and a holder of a petroleum right on the other in relation to or in Payment for 109. There shall be payments for rental of State property, public connection with or arising out of any terms and conditions of a rental of State lands or the provision of specific services requested by the licensee petroleum right shall be resolved by consultation and negotiation. property. from public enterprises but the rate charged for such rentals or (2) The licence shall include terms governing the services shall not exceed the rates charged to other members of the resolution of disputes in the event that no agreement is reached public who receive similar rentals or services. pursuant to subsection (1), which may provide for arbitration as provided in the licence or pennit. Bonus 110. (1) A petroleum licence may provide for the payment of payments. one or more lump sum bonuses from the licensee, which may be PARTXIV-TRANSFER,REVOCATION AND SUSPENSION OF conditioned upon the award of a licence or the achievement of specific PETROLEUM RIGHTS production targets. 114. (1) Subject to subsection (5), a licensee shall not directly Transfer of (2) Bonuses paid under subsection (1) may be included or indirectly assign its participating interest in a petroleum right, licence. as one of the biddable items in a competitive process for the award of whether in whole or in part, to a third party or an affiliate without the a petroleum licence. prior written approval by the Minister. National 111. (1) The National Company shall have the right of first (2) An indirect assignment, sale or transfer under Company to subsection (1) includes, assignment, sale or transfer of shareholding have right refusal for any item imported duty free under this Part which is later first of sold in Sierra Leone. companies and other ownership shares which may provide decisive refusal. control of the holder ofthe petroleum right. (2) Where the National Company does not exercise its (3) A transfer under subsection (1) may be made only- right of purchase, the licensee may sell to any other person subject to all import duties and taxes as if the items were being imported at (a) to a pre qualified company; and the tinie of the sale, but no duty or tax shall be imposed if the purchaser could have imported the item sold free of custom duty or other tax (b) where the Minister is satisfied, on the advice under an exemption similar to that of the licensee. of the Directorate, that all obligations of the transferor, which had not been fulfilled at the Foreign 112. A licensee shall be entitled to receive, remit, keep and utilise currency tinie of the transfer, are undertaken by the transactions. outside Sierra Leone, all the foreign currency obtained from the sale transferee. of petroleum assigned to it by the licence or purchased in or from transfers as well as its own capital, receipts from loans and in general (4) Every transfer or assignment of a participating interest all assets thereby acquired abroad. in a petroleum licence shall be subject to the right of first refusal referred to in section 86 .

68 No.7 Petroleum (Exploration andProduction) Act, 2011 No.7 Petroleum (Exploration andProduction) Act, 2011 (5) A transfer of a licensee's ownership riglit to fixed (a) where there are serious or repeated violations facilities shall be subject to tlie prior approval oftlie Minister. of this Act, or any conditions or directives issued under tliis Act, by tlie liolder of tlie (6) A mortgage in a fIxed facilitywhicli is subject to private petroleum riglit; property riglits sliall be subject to tlie prior approval of tlie Minister. (b) wliere an application for a petroleum riglit is (7) An approval under tliis section sliall not be discovered to contain false, misleading or umeasonably witlilield. incorrect information, or where vital information lias been witlilield and tlie (8) A transfer pursuant to this section may be subject to Minister is satisfied tliat tlie petroleum riglit sucli liandling fee as tlie Minister may prescribe. would not have been granted if correct or complete information had been made available; (9) Notice of an approved transfer pursuant to tliis section and any fee collected shall be publislied in tlie Gazelle and in sucli (c) wliere tlie guarantee wliicli tlie liolder oftlie otlier manner as may be determined by tlie Minister, petroleum riglit is obliged to provide under this Act lias become significantly weakened; if the person or his nominee is, or the person and his nominee are, or entitled to appoint, or preventtlie appointment of, a sufficient number of directors to [onn a quorum at meetings of directors of the company. (d) wliere tlie liolder of a petroleum riglit is (10)For tlie purposes of tliis section a person shall be deemed to dissolved or enters into a scheme or have control of a cornpany- arrangement or composition with its creditors, or wliere bankruptcy or winding up (a) if tlie person or liis nominee liolds, or tlie proceedings are commenced in respect of person and liis nominee liold, a total of, that petroleum riglit. twenty percent or more of the equity shares in the company; or (2) Tlie Minister sliall give a liolder of a petroleum riglit forty-five days notice to sliow cause wliy tlie petroleum riglit sliould (b) if the person or his nominee is, or the person not be revoked or suspended and tlie notice shall be publislied in and his nominee are, entitled to appoint, or the Gazette and one or more newspapers circulating in the area where prevent the appointment of, a sufficient tlie breacli occurred. number of directors to form a quorum at meetings of directors of tlie company. (3) A notice under subsection (2) shall set out- Revocation 115. (1) A petroleum riglit may be revoked or suspended by (a) tlie relevant condition oftlie licence or permit or suspension the 11inister on any of the following grounds:- or tlie requirement of tlie Act to wliicli tlie of petroleum breacli is related; licence.

70 No.7 Petroleum (Exploration andProduction) Act, 2011 No.7 Petroleum (Exploration andProduction) Act, 2011 71 (b) the acts, omission or other facts which, in PART XV-GENERAL PROVISIONS RELATING TO the Minister's opinion, constitute a PETROLEUM RIGHTS contravention of the condition or legislation and reasons why the Minister is of the 118. (I) Any report submitted by a holder of a petroleum right Confidential opinion that any of the circumstances that is deemed to be a confidential report, shall become non- reports specified in subsection (I) exists; and confidential ninety days after the expiration date of the petroleum right (c) the period not being less than twenty-eight days from the date of issuing of notice within (2) Any report required to be submitted under this Act which representations or objections may be by the holder of a petroleum right that is not deemed to be a made by the licensee or permit holder. confidential report is a non-confidential report. Relinqui~ment, 116. (I) A licensee may relinquish parts of the licence area surrender and (3) By designation of a report as a 'confidential report', revocation of and a holder of a petroleum right may surrender the licence or the the holder of the petroleum right deems to have represented that the petroleum permit at the end of each calendar year, provided notice of such licence. release of infonnation contained in the report to third parties would relinquishment or surrender has been presented to the 11inister at materially adversely affect the holder of the petroleum right or its least three months in advance and all obligations with regard to the economic well-being. relevant licence or pennit have been complied with to the satisfaction ofthe Minister. (4) In no case shall a report be deemed to be a confidential (2) The relinquishment, surrender or revocation of a report because it contains infonnation that was publicly available at petroleum right, shall not release the holder of the petroleum right the time of submission of the report or is mainly of scientific rather from its financial and other obligations under this Act. than commercial value. (3) Where a work obligation or other obligation has not (5) In no case shall a claim to confidentiality prevent been fulfilled at the relinquishment, surrender or revocation of a public disclosure of information as prescribed by paragraph (s) of petroleum right, the Minister may demand payment in full or in part, subsection (2) of section 5, subsection (4) of section 13, subsections of the amount required for fulfilment ofthe obligation. (I) and (4) of section 32, subsection (2) of section 40, subsection ( 4) of section 44, subsection (4) of section 88, subsection (5) of section (4) Notice of a relinquishment, surrender or revocation 91, subsection (9) of section 114, subsection (4) of section 116 and of a petroleum right under this section shall be published in the subsection (2) of section 121. Gazette and in such other form as may be determined by the Minister. 119. (I) The Petroleum Register, non confidential agreements Public access. Register of 117. (I) The Minister shall cause to be kept and maintained at and non-confidential reports submitted by past and present holders petroleum of petroleum rights shall be open to inspection by members of the rights. the Ministry, a register of permits and licences granted under this Act. public during normal official hours and members of the public shall be permitted to take copies thereof on payment of the prescribed (2) A person may on the payment of the prescribed fee, fees. inspect the register or take copies of an entry in the register.

72 No.7 Petroleum (Exploration andProduction) Act, 2011 No.7 Petroleum (Exploration andProduction) Act, 2011 13 (2) In addition to disclosure of information referred to in (I) such other matters as may be prescribed. subsection (5) of section 118, the Minister shall, subject to the confidentiality provisions of this Act and upon the payment of (2) The licensee shall keep at the address referred to in reproduction fees as may be prescribed make them available to the subsection (I), accurate geological maps and plans, geophysical public. records, and interpretations thereof relating to the area to which the licence relates. Review of 120. The terms and conditions of a petroleum licence or a pennit terms and conditions. for the laying and operation of a pipeline may be reviewed at any time (3) The licensee shall submit to the Minister- that a significant change occurs under the circumstances prevailing at the time of the issue of the licence or the permit (a) at half-yearly intervals commencing SIX months after the grant of the licence- Reservation 121. (I) The Minister may, on advice of the Directorate, decide of areas. that an area not being part of a licence area, shall not be the subject (i) a summary of all geological and of a petroleum right but may revoke such decision. geophysical work carried out; (2) Notice of a revocation of a decision under subsection (il) a summary of all drilling activities and (I) shall be published in the Gazette and in such other form as may be results obtained; determined by the Minister. (iii) copies of maps, tapes or reports and of Information, 122. (I) A licensee shall keep at an address in Sierra Leone data, reports other geological and geophysical data notified to the 11inister, complete and accurate records containing and records, prepared for the licensee, in or in respect etc. full particulars of the following matters:- of the period concerned; (a) the drilling, operation, plugging or (b) within sixty days after the end of each year abandomnent of wells; ofthe term ofthe licence - (b) the strata and subsoil through which wells are drilled; (i) a record describing the results of all exploration and production operations (c) the casing inserted in wells and any alteration carried out by the licensee in the year to the casing; concerned; (d) any petroleum, water and minerals or (il) estimates, if any, of economically dangerous substances encountered and any recoverable reserves of petroleum in the significant discovery of any mineral; form of crude oil and natural gas at the end of the year concerned; and (e) the areas in which any geological or (iii) summaries of exploration wells drilled, geophysical work has been carried out; and including lithological groups, letter classification boundaries and hydro-

74 No.7 Petroleum (Exploration andProduction) Act, 2011 No.7 Petroleum (Exploration andProduction) Act, 2011 75 carbon zones, within three months after (I) the quantity of natural gas processed in Sierra the completion of drilling or, in the case Leone by the licensee or on behalf of the of information that cannot reasonably licensee for the removal of liquids and be obtained in that period, as soon as liquefied petroleum, and the quantity of any possible after the completion of drilling; other gases or solids obtained from it; (c) such other information and at such intervals (g) the quantity of natural gas vented or flared; as may be prescribed and Accounts to 123. A licensee shall keep at an address in Sierra Leone notified such further infonnation as may be prescribed. be kept. to the Minister, complete and accurate accounts containing full particulars ofthe following matters:- 124. (1) Except otherwise provided in this Act, any other Protection enactment or a petroleum right, a holder of a petroleum right, of data. (a) the gross quantity of any petroleum extracted contractor or sub-contractor shall keep the data acquired and any from the area to which the licence relates; existing data released by the Minister to the holder of the petroleum right, its contractors and sub-contractors confidential, and shall not (b) the grades and gravity of any crude oil disclose the data to a third party without the consent of the Minister. produced and the composition of natural gas produced; (2) Any consent required under subsection (1) shall not be umeasonably withheld or delayed. (c) the quantities of - (3) All data disclosed to third parties shall be disclosed (i) crude oil; on terms, which to the extent possible ensure that they are treated as confidential by the recipient for so long as the data remains subject (ii) natural gas; and to the confidentiality undertakings. (ni) sulphur, in any form, or any other (4) Without prejudice to subsections (1), (2) and (3), the minerals in any fonn or any other gases, Minister may provide data and information that may corne into his liquids or solids; possession and may be relevant to enable the holder of the petroleum right to carry out its exploration operations under this Act. (d) the quantity of petroleum inj ected into a reservoir for enhanced recovery purposes or (5) The data provided under subsection (3) shall be disposal; treated with confidentiality and shall not be disclosed to third parties (e) the quantity of petroleum consumed during without the written consent of the Minister. petroleum operations, other than quantities reported under paragraph (d), and consumed (6) None of the parties under this section shall be bound in pumping to field storage and refineries in by the confidentiality underdertaking referred to in subsection (5) Sierra Leone, of crude oil and natural gas; with respect to any data which is in the public domain through no

76 No.7 Petroleum (Exploration andProduction) Act, 2011 No.7 Petroleum (Exploration andProduction) Act, 2011 77 fault of the party or which has already been known by the party officer in the exercise of his powers under before the effective date of the agreement or which became known to this Act, or any public officer involved in the that party other than by reason of a breach of the undertakings in implementation of this Act; or subsection (5). (b) knowingly or recklessly makes a statement or produces a document that is false or (7) The holder of a petroleum right shall disclose to the misleading in a material particular to the Minister, the technology necessary for the evaluation and Minister, an employee of the Directorate or understanding of any raw data or processed data resulting from its an authorised officer engaged in carrying out work in the area to which the petroleum right relates. his duties and functions under this Act, or any government official involved in the (8) The information on the technology provided in implementation of this Act, subsection (7) shall not be disclosed by the Minister to third parties except with the written consent of the holder of the petroleum right. commits an offence and is liable on conviction to a fine not exceeding Twenty Thousand United States Dollars or its equivalent in leones Ownership of 125. The data and information obtained by a holder of a or to imprisonment for a tenn not exceeding five years or to both the petroleum petroleum right as a result of petroleum operations and the geological, fine and imprisonment. data. geophysical, technical, financial and economic reports, studies, interpretations and analysis prepared by or on behalf of a holder of a 128. Any person who, without reasonable excuse, obstructs, Obstruction petroleum right shall be the property of the State. molests, hinders or prevents a holder of a petroleum right from of licensee undertaking any act which the holder is authorised to do by this Act PART XVI-OFFENCES or his petroleum right, commits an offence and is liable on conviction to a fine not exceeding Twenty Thousand United States Dollars or its Disclosure of 126. (1) Any person who contravenes section 124 commits equivalent in leones or to imprisonment for a tenn not exceeding five prohibited data. an offence and shall be liable on conviction to a fine not exceeding years or to both the fine and imprisonment. Twenty Thousand United States Dollars or its equivalent in leones or to imprisonment for a tenn not exceeding five years or to both the 129. (1) No public officer shall directly or indirectly, acquire Conflict of fine and imprisonment. any . hor ng t "mterest m any petroleum' ng ht and any d ocument or interest . transaction purporting to confer any right or interest to a public (2) In proceedings on a prosecution for an offence under officer shall be null and void. this section, it shall be a defence if the person charged proves that the infonnation disclosed and to which the prosecution relates was, (2) Subject to subsection (3), no public officer shall own without that disclosure, generally known to the public. or retain any shares in a company carrying out petroleum operations in Sierra Leone. Obstruction 12 7. Any person who- (3) Where a public officer is at the assumption of the of Minister, officer. functions of his office, the holder of shares in the company referred (a) without reasonable excuse, obstructs, to in subsection (2), the public officer shall divest himself from such molests or hinders the Minister, or an right or interest or dispose of the shares within ninety calendar days employee of the Directorate or an authorised after assumption of office.

78 No.7 Petroleum (Exploration andProduction) Act, 2011 No.7 Petroleum (Exploration andProduction) Act, 2011 79 C4) A public officer who contravenes subsections (I), (2) quantity recovered or for the payment or (3) commits an offence and shall be liable on conviction to a fine of a part of that amount as the court, not less than Fifty Thousand United States Dollars or its equivalent having regard to all the circumstances, in leones or to a tenn of imprisonment not exceeding twelve months thinks fit or to both such fine and imprisonment. (2) Where the court is satisfied that an order made under (5) For the purposes of this section, " public officer" subparagraph Ci) of paragraph (b) of subsection (I) cannot for any means a public officer for the time being engaged in the administration reason be enforced, the courtrnay, upon the application of the person of this Act by whom the proceedings were brought, set aside the order and make an order referred to in subparagraphs Cii) and Ciii) of paragraph Offences 130. Where an offence which has been committed by a body Cb) of subsection (I). committed by body corporate is proved to have been committed with the consent or corporate. connivance of, or to be attributable to any neglect on the part of an (3) The court may, before making an order under this officer of the body corporate or any person who was purporting to section, require notice to be given to, and to hear any person as the act in that capacity, he as well as the body corporate, commits that court thinks fit offence and is liable to be prosecuted and punished accordingly. 132. Any person who wilfully or negligently contravenes any Contravention Order of 131. (I) Where a person is convicted of an offence under this directive issued under this Act commits an offence and is liable on ofddecidsions .. moc= forfeiture. Act, the court may in addition to any other penalty imposed- convlcilon- issued under this Act. Ca) make an order for the forfeiture of any funds, Ca) in the case of an individual, to a fine not money instruments, documents, facilities, exceeding Twenty Thousand United States vehicles, crafts, vessels or equipment used Dollars or its equivalent in leones or to in the commission of the offence; and imprisonment for a tenn not exceeding five years or to both the fine and imprisonment. (b) make an order- (b) in the case of a body corporate, to a fine not Ci) for the forfeiture of petroleum obtained exceeding Fifty Thousand United States or recovered in the course of the Dollars or to its equivalent in leones. commission of the offence; Cii) for the payment by that person to the 133. Any person who- Miscellaneous offences. State of an amount equal to the proceeds received of the sale of (a) in, or in connection with, any application petroleum so obtained or recovered; or under this Act or a petroleum right or in response to an invitation or requirement of Cni) for the payment by that person to the the Minister or any public officer under this State of the value at the wellhead, Act, knowingly or recklessly gives or permits assessed by the court in respect of the to be given infonnation which is false or misleading in a material particular; No.7 Petroleum (Exploration andProduction) Act, 2011 No.7 Petroleum (Exploration andProduction) Act, 2011 81 (b) in any report, return or affidavit submitted in (3) Negotiations between the owner and user concerning accordance with this Act or a petroleum right, the use of a facility shall be organised and conducted in a spirit of knowingly or recklessly includes, or permits integrity and good faith, in accordance with good corporate to be included, any information which is false governance and in such a way that the negotiations do not provide or misleading in a material particular; or one party with an umeasonable advantage at the expense of the other party. (c) places or deposits, or is accessory to the placing or depositing of, any petroleum or (4) Any agreement on the use of facilities referred to in substance in any place with the intention of subsection (I) shall be submitted to the Minister for approvaL misleading any other person as to the (5) The Minister may, on approving an agreement possibility of a reservoir existing in that place, according to subsection (2), or in the event that no agreement is reached within a reasonable period of time, stipulate in writing, tariffs commits an offence and is liable on conviction- and other conditions or subsequently amend the conditions that have been approved or stipulated in order to ensure that (i) in the case of an individual, to a fine not implementation of projects is carried out with due regard to exceeding twenty thousand United considerations relating to resource management and to providing States dollars or its equivalent in leones the owner of the facility with a reasonable profit taking into account, or to imprisonment for a term not among other things, investments and risks. exceeding five years or to both the fine and imprisonment. (6) The Minister may directthat facilities may be used by others if so warranted by considerations for efficiency, resource (ii) in the case of a body corporate, to a fine management or for the benefit of society and that the use would not not exceeding Fifty Thousand United constitute any umeasonable detriment to the licensee's own requirements or those of someone who has already been assured the States Dollars or to its equivalent in right of use. leones. Use of PART XVII-MISCELLANEOUS 134. (I) A person requiring the use of spare capacity of a facilities. facility owned by another party shall, on objective and non- 135. (I) For the purposes of this Act, the Directorate or an Power of discriminatory conditions have a right to the use of that facility in authorized officer may, at all reasonable times- entry. accordance with this Act. (a) enter any area, structure, vehicle, vessel, (2) An agreement relating to the use of a facility of another aircraft or building used in connection with party shall be based on the principle that profits from production petroleum operations; shall primarily be earned by the producing field and the owner's (b) inspect and test, or cause to be tested by a incentive to maintain the capacity of the facilities and to make qualified person, any machinery or equipment investments in additional capacity shall be ensured. used in connection with petroleum operations;

82 No.7 Petroleum (Exploration andProduction) Act, 2011 No.7 Petroleum (Exploration andProduction) Act, 2011 83 (c) take or removefor the purpose of analysis or hear and dispose of the appeal, but the bringing of the appeal does testing or for use in evidence in connection not affect the execution and the operation of the decision, direction with an offence against this Act, samples of or order appealed from pending disposition of the appeaL petroleum, water or other substances from a well; (3) On appeal under subsection (2), the Minister may (d) inspect, take extracts from, and make copies rescind or affirm the decision, direction or order appealed against or of, any document relating to any petroleum may make a new decision, direction or order in substitution and that operations; decision, direction or order shall not be subject to further appeaL (e) with respect to the health and safety of (4) In exercising its powers under subsection (1), the persons employed by a holder of petroleum Directorate or an authorised officer may be accompanied by a person rights in or in connection with any petroleum who the Director-General or the officer, as the case may be, believes operations, impose restrictions on the has special or expert knowledge of a matter being inspected, tested holder, by instrument in writing; or examined. (I) order, by instrument in writing, the discontinuance of the use of any machinery (5) The holder of a petroleum right shall provide the or equipment, which he considers unsafe, Directorate or an authorised officer with all reasonable facilities and unless and until such action as is necessary assistance, including the provision of necessary means of transport, for the safety as specified in the instrument for the effective exercise of the powers under this section. is taken and completed; 136. (1) A licensee shall allow the holder of another petroleum Right to place (g) make such examinations and inquiries as are facilities in a right to place in the licensee's licence area facilities such as pipelines, licence area. necessary to ensure that the provisions of this Act, and any directive, restrictions or cables or wires of various kinds, provided that these facilities do not orders made under this Act, are being cause unreasonable inconvenience to such licensee. complied with; and (2) Subsection (1) applies correspondingly to necessary Q1) obtain and record statements from witnesses, route and soil surveys prior to the placement. and appear at or conduct inquiries regarding accidents occurring in the course of any 137. Petroleum operations shall be conducted from a base in Petroleum petroleum operations and appear at inquests, S ·lerra L eone andthe 1·lcensee may b e d·lrecte d to use b ases d· eSlgnate d be operations conductedto and call and examine and cross-examine by the Minister. from Sierra witnesses. Leone. 138. Expenses related to the supervision of petroleum Licensee to (2) Any person who is aggrieved by a decision of the . . bear costs of operatIOns under this Act shall be borne by the relevant holder of a supervision. Directorate or an authorised officer made under this section may appeal in writing to the Minister who shall, as soon as practicable, petroleum right.

84 No.7 Petroleum (Exploration andProduction) Act, 2011 No.7 Petroleum (Exploration andProduction) Act, 2011 85 Survey of 139. (I) The Directorate may, at any time, by notice in writing operation, issue directives to and impose wells and facilities. served on a licensee, direct the licensee to carry out a survey of the restrictions on the holder of the petroleum position of any well or facility specified in the notice and to submit right or any persons so employed, by promptly, a written report of the survey. instrument in writing; (2) A person to whom a directive is given under (b) order, by instrument in writing- subsection (I) who fails or neglects to comply with the directive commits an offence and is liable on conviction to a fine not exceeding Ci) the cessation of petroleum operations twenty thousand United States Dollars or its equivalent in leones or on or in, and the withdrawal of all to a tenn of imprisonment not exceeding three years or to both the persons from any structure or building fine and imprisonment. that is being used in connection with any petroleum operations; or Security for 140. Upon granting a petroleum right, the holder of the right fulfilment of obligations. shall provide such security as prescribed by regulations for fulfilment Cil) the discontinuance of the use of any of the obligations, which the licensee has undertaken, as well as for machinery or equipment, which he possible liability in connection with the petroleum operations. considers unsafe, Responsibility 141. Participants who jointly hold a petroleum right are jointly until such action as is necessary for safety and specified in the for commit- and severally responsible to the State for financial and other instrument is taken and completed; and ments. obligations arising out of petroleum operations under the petroleum right. (c) make such examinations and inquiries as may be necessary to ensure that the provisions Obligation to 142. A holder of a petroleum right shall ensure that any person of this Act, and any directives issued, comply with this Act. working for him, either personally, through employees or through conditions imposed or orders made under this contractors or subcontractors, complies with this Act. Act are being complied with. Compliance 143. Where the Minister is of the opinion that the holder of a (2) The licensee shall provide the Minister or an with petroleum right is contravening a condition of such right or a authorised officer with all reasonable access to facilities and conditions of petroleum requirement under this Act or regulations, codes or standards made assistance including the provision of the necessary means of transport, rights. under this Act, he shall direct the holder of the petroleum right to for the effective exercise of the powers of a 11inister or authorised comply with that condition or requirement. officer under this section. Powers of 144. (I) For the purposes of this Act, the Minister or an 145. (I) A document or notice required or permitted to be Service of Minister and authorised officer may, at all reasonable times- served on, or given to, a person for the purposes of this Act, may be documents. authorised officers. served- Ca) with respect to the health and safety of persons employed by a holder of a petroleum Ca) in the case of an individual, other than the right in or in connection with any petroleum Minister or the Director-General, by

86 No.7 Petroleum (Exploration andProduction) Act, 2011 No.7 Petroleum (Exploration andProduction) Act, 2011 delivering it personally upon the individual 147. The Minister may issue codes of practice for the purposes Code~ of practice. or by sending it by post to him at his usual or of setting or endorsing standards or specifications concerning the last known place of abode or business; design, construction, installation and importation of petroleum facilities. (b) in the case of the Directorate, in such manner as may be prescribed; 148. This Act shall take precedence over all existing enactments Supremacy . to petro Ieurn operatIOn re Iatmg . .ill S'lerra L eone and were h there IS . a of Act . (c) in the case of a body corporate- conflict between the provisions of this Act and any other enactment (i) by leaving it at the registered or principal or any agreement made under this Act, the provisions of this Act office of the body corporate; shall prevail. (ii) by sending it by post to the body 149. (1) No default ofaholder ofapetroleum right in performing Force corporate at the registered or principal any of its obligations under such right shall be considered a breach majeure. office of the body corporate; or of the terms of that right if the default is caused by a case of force majeure. (ni) by delivering it to an individual in the employment or acting on behalf of the body corporate that is authorised by the (2) If in the event of force majeure, the performance of body corporate to accept service of or any of the obligations under a petroleum right is delayed, that delay, to receive the document. extended by the period of time required to repair the damage caused during the delay shall be added to the period provided by this Act or (2) For the purposes of paragraph (c) of subsection (1), under the petroleum right for the performance of those obligations, the principal officer of a body corporate incorporated and the term of the petroleum right extended accordingly. outside Sierra Leone is its place of business established Act No.5 of 2000 under Part XI 0 f the Comparues Act 2000. (3) Where a holder of a petroleum right considers it is prevented from performing any of its obligations by the occurrence (3) Any notice or document may be served on the J\1:inister or Director General by delivering it at their respective offices, of a case of force majeure, it shall forthwith notify the Minister by or by sending it by registered post to the office of those offices. specifYing the grounds for establishing force majeure and take, subject to the approval in writing by the Minister, all necessary and useful Indemnity of 146. A holder of a petroleum right shall, at all times, keep the steps to ensure the normal resumption of its obligations. the Republic of Sierra Government indemrufied against all actions, claims and demands that Leone. may be brought or made against the State by reason of anything (4) Obligations other than those affected by force majeure done by the holder in the conduct or purported conduct of petroleum shall continue to be performed in accordance with this Act and the operations under this Act. petroleum right.

88 No.7 Petroleum (Exploration andProduction) Act, 2011 No.7 Petroleum (Exploration andProduction) Act, 2011 89 Vesting of 150. (1) Subjectto subsection (2), all property and assets whicli (d) the manner and place of delivery of assets. immediately before the corning into operation of this Act were vested petroleum; in tlie State for the use of tlie Petroleum Resources Unit, sliall, with effect from tlie entry into force of tliis Act and witliout furtlier (e) confidentiality; assurance, vest in the Minister subject to all interests, liabilities, cliarges, obligations and trusts affecting tlie property or assets. (I) the licensee's obligation to make information on its operations under this Act available to (2) Except as is provided in subsection (1) in relation to tlie public; property, all contracts, debts, obligations and liabilities oftlie State on account of tlie Petroleum Resources Unit immediately before the (g) the exploration for petroleum and the carrying corning into operation of this Act shall remain vested in the State and on of operations and the execution of works may be enforced by or against the Government. for tliat purpose; Transfer of 151. On tlie coming into operation of this Act, sucli employees (Ii) tlie production of petroleum and tlie carrying certain employees. oftlie Petroleum Resources Unit as sliall be specified by the Minister on of operations, and the execution of works in writing are transferred to the Directorate without prejudice to any for tliat purpose; entitlement to pension, gratuity or other vested or accrued rights from their previous employment and on such tenns and conditions of (i) the conservation and prevention of the waste service no less favourable as were applicable to them in their previous of natural resources, whether petroleum or employment. othervvise; Regulations. 152. (1) Tlie Minister may, by statutory instrument, make G) the [onn and content of, and conditions with regulations generally for giving effect to tlie provisions of this Act respect to applications for tlie grant and and for its due administration. renewal of petroleum riglits; (2) Witliout limiting the generality of subsection (1), the (k) ensuring the safe construction, erection, 11inister may make regulations relating to- maintenance, operation or use of facilities and equipment used in connection with (a) the application for petroleum riglits under petroleum operations; this Act; (1) identification of facilities used in connection (b) third party access to facilities under tliis Act; with petroleum operations; (c) working conditions in petroleum operations; No.7 Petroleum (Exploration andProduction) Act, 2011 No.7 Petroleum (Exploration andProduction) Act, 2011 91 (m) the health, safety and welfare of persons (v) reference map of numbered areas, each of employed in petroleum operations and which shall be described as a block, and generally for necessary safety measures; guidelines on the opening and closing of blocks and the maximum number of blocks (n) the prevention of pollution and the taking of that may be held under a petroleum licence remedial action inrespect of pollution damage by an applicant; which may occur in connection with petroleum operations; (w) competitive bidding procedures for petroleum licences; (0) the inspection of areas in which petroleum operations are being carried out and of the (x) determining the value of crude oil and natural plant, machinery and equipment within those gas; areas; (y) determining the domestic supply requirement; (P) the reporting of and inquiries into accidents and arising out of petroleum operations; (z) prescribing the model petroleum licence. (q) the keeping and inspection of records, accounts, statistics and plans with respect (3) Regulations made under subsection (1) may, in respect to petroleum operations; of any contravention of its provisions- (u) the relinquishment of portions of areas (a) prescribe a penalty of a fine not exceeding subject to the petroleum rights; twenty thousand United States Dollars or its (r) the protection of fishing, navigation, and any equivalent in leones or to imprisonment for a other activities taking place within or in the tenn not exceeding two years, or to both the vicinity of areas in which petroleum fine and imprisonment operations are being carried out; (b) in the case of a continuing contravention, prescribe an additional penalty not exceeding (s) the making and submission of reports, returns and programmes; five thousand United States Dollars or its equivalent in leones in respect of each day (t) the standards for petroleum and trans- on which the offence continues; and portation in consultation with the Standards Bureau; (c) prescribe a higher penalty not exceeding twenty thousand United States Dollars or its (u) the rates of royalty payable in respect of equivalent in leones in respect of a second petroleum production, the methods of or subsequent contravention. calculation of the amount of royalty and the manner and times of payment;

92 No.7 Petroleum (Exploration andProduction) Act, 2011 No.7 Petroleum (Exploration andProduction) Act, 2011 93 Repeal and 153. (I)The Petroleum Exploration and Production Act savings. Act No. 11 of 2001 is hereby repealed. 2001. (2) Notwithstanding subsection (1), any rules, regulations, orders, notices, prescriptions and other instruments or directives issued under the repealed Act and in existence immediately before the commencement of this Act, shall continue in operation Passed in Parliament this 14th, day of July, in the year of our Lord two thousand and eleven. until their expiration or until their express repeal or revocation. (3) All investigations, prosecutions and other legal proceedings, instituted or commenced under the repealed Act and which have not been concluded before the commencement of this MOHAMED LEBBIE, Act, shall be continued and concluded in all respects as if that Act Officer- in -Charge had not been repealed. Office a/the Clerk a/Parliament. Transitional 154. (I) A licence or permit issued under the repealed Act and provisions. which is in force immediately before the commencement of this Act- Ca) shall continue to have effect from the THIS PRINTED IMPRESSION has been carefully compared by me with the Bill commencement of this Act as if granted under which has passed Parliament and found by me to be a true and correct printed copy of the said Bill. this Act; and (b) in the case of a licence orpermit for a specified period, shall remain in force, subject to this MOHAMED LEBBIE, Act, for so much of that period as falls after Officer-in-Charge the commencement of this Act. Office a/the Clerk a/Parliament. (2) Where necessary or desirable, the Minister may make rules to facilitate the application of this Act with respect to all or any of the licences or permits and for that purpose the rules may modify or exclude the application of any provision of this Act in circumstances or for any purposes stated in the rules. PRfrTTED AND PUBLISHED BY THE GOVERNJ:v!ENT PRINTING DEPARTJ:v!ENT, SIERRA LEONE. GAZETTE No. 60 OF 8TH SEPTEl:v!BER, 2011.