Introduction
The Petroleum Activities Act 17 of 2023 (the “PAA”) replaced the Petroleum (Exploration and Production) Act 1986; however, at present, the Regulations made under the 1986 Act remain applicable law under the PAA. The PAA is aimed at regulating and managing the development of Guyana’s petroleum sector. This series is intended to highlight some of the key provisions contained in the PAA that relate to upstream matters.
Guyanese lawmakers on August 9, 2023, passed the Petroleum Activities Bill
The term ‘upstream’ is a petroleum industry classification which refers to all activities carried out in the exploration for, and production of petroleum, including the first stage of processing crude oil or natural gas (petroleum) to remove impurities so that it can then be properly stored or transported. The terms ‘exploration’, ‘development’ and ‘production’ in the PAA are broad headings that describe these upstream activities. The petroleum industry also has two other classifications – midstream and downstream. Midstream refers to petroleum transportation and storage and downstream refers to refining petroleum into various products.
The passage of the PAA was key to Guyana’s operationalization of the Stabroek Block project
This ‘101’ series on ‘Oil Law’ seeks to provide the reader with a clear overview of the upstream matters addressed under the Petroleum Activities Act 2023 (PAA). It highlights key updates, shares insights into the requirements of the regulatory framework and helps the reader gain an appreciation of the legal processes related to the management of petroleum exploration, development and production.
The PAA is divided into 18 sections, each of which holds significant importance. A summary of the contents of each part is available in the Explanatory Memorandum of the Petroleum Activities Bill No. 16 of 2023. For this series, we will focus on seven sections.
- Part I: Preliminary (Interpretation)
- Part II: Administration and Authority
- Part III: Exploration
- Part IV: Development and Production
- Part IX: Decommissioning
- Part XIII: Safety, Security and Emergency Response
- Part XVI: Monitoring, Supervision, Inspection and Verification
The following is a summary of the contents of each of the seven parts, adapted from the Explanatory Memorandum.
– Part I: Preliminary (Interpretation) – contains definitions that have significance for safe, economical, environmentally sound and efficient activities within the sector.
– Part II: Administration and Authority – makes general provisions relating to the administration and management of petroleum operations, detailing the Minister’s role, including the requirements for the Minister to comply with Cabinet directives and ensuring that petroleum agreements align with the PAA.
– Part III: Exploration – addresses various matters such as geological surveys, exploration, discovery of petroleum and the process for surrendering an exploration area.
– Part IV: Development and Production – sets out the application process for obtaining a production licence, the requirements for the grant of the licence, restrictions on the grant of the licence, contents of the licence, the different periods for a licence to produce crude oil and a licence to produce natural gas, and the conditions for licence renewal and licence surrender.
– Part IX: Decommissioning – this is a critical environmental management process which mainly occurs at the final stage of exploration or production operations. This part details the requirements for decommissioning and post-decommissioning activities and the obligations of the licence holder. This includes submission of a decommissioning budget and plan, the contents of the plan, the establishment of a decommissioning fund, and post-decommissioning reporting with independent verification.
– Part XIII: Safety, Security and Emergency Response – sets out various safety obligations and addresses matters on facilities and infrastructure, risk assessment, safety management systems, security and emergency preparedness and response.
– Part XVI: Monitoring, Supervision, Inspection and Verification – contains provisions which empower the Minister, or any person or government agency duly authorised by the Minister, to carry out oversight, inspection, monitoring and enforcement actions as necessary, for the implementation of the provisions of the PAA. This includes the authority to enter any area, structure, building, vehicle, vessel, or aircraft which, in the opinion of the Minister or authorised appointee, has been, is being or is slated for use in connection with petroleum operations. It also covers the power to inspect and test any machinery or equipment, remove samples or evidence from a well for testing or as evidence related to an offense under the PAA, and to issue directions and impose restrictions on a license holder concerning the health and safety of its employees.
In our next publication, we will look at some key themes that shape the legislative character of the PAA.
DISCLAIMER: This series is not intended to serve as a replacement for the Petroleum Activities Act 17 of 2023 nor is it a substitute for legal or other professional advice in any manner whatsoever.
