CHAPTER 440 - PETROLEUM (EXPLORATION AND PRODUCTION) ACT: SUBSIDIARY LEGISLATION

INDEX TO SUBSIDIARY LEGISLATION

Petroleum (Exploration and Production) (National Petroleum Company) Regulations, 2011

Petroleum (Exploration and Production) Regulations

Petroleum (General) Regulations

PETROLEUM (EXPLORATION AND PRODUCTION) (NATIONAL PETROLEUM COMPANY) REGULATIONS, 2011

[Section 100]

Arrangement of Regulations

   Regulation

   1.   Title

   2.   Interpretation

   3.   Objects of Company

   4.   Shareholding of Company

   5.   Composition of Board

   6.   Missing

   7.   Prohibition of publication of, or disclosure of information to unauthorised person

Act 10 of 2008,

SI 57 of 2011.

1.   Title

These Regulations may be cited as the Petroleum (Exploration and Production) (National Petroleum Company) Regulations, 2011.

2.   Interpretation

In these Regulations, unless the context otherwise requires–

“Board” means the Board of Directors of the National Petroleum Company;

“Company” means the National Petroleum Company;

“licence” means a petroleum exploration licence or a petroleum development and production licence; and

“member” means a shareholder in the Company, other than the Government.

3.   Objects of Company

The Company shall hold shares on behalf of the Government in petroleum operations and shall–

      (a) carry, explore, produce, refine, process, transport and trade in–

      (i)    petroleum from wells;

      (ii)    petroleum products;

      (iii)    natural gas; and

      (iv)    other fluid hydro-carbons;

      (b)    carry out directly or through its subsidiaries, with or without the association of third parties, any of the activities listed in these objectives outside Zambia;

      (c)   form consortia with local and foreign enterprises, either as leader or not, so as to expand its activities, gather technology and expand investments applied to the petroleum industry;

      (d)   establish subsidiaries, which may enter into joint ventures with other enterprises either with majority or minority shareholding;

      (e)   establish a subsidiary, which may operate in association with other enterprises with majority or minority shareholding, for the purpose of building and operating–

      (i)    the Company’s pipelines; and

      (ii)    the Company’s fleet for the transportation of petroleum, national gas and other by-products;

      (f)   acquire goods, works and services in accordance with the Public Procurement Act, 2008; and

      (g)    perform such other functions as may be required for the better carrying out of these Regulations.

4.   Shareholding of Company

   (1) The Government shall hold 51 per cent of the shares in the Company and 49 per cent of the shares of the Company shall be available to Zambian citizens through the floatation of shares on the Zambian Stock Exchange.

   (2) The Government may transfer its shares upon a change of policy.

5.   Composition of Board

   (1) The Board shall consist of the following Directors:

      (a)    a person with expertise in–

      (i)    engineering;

      (ii)    law;

      (iii)    finance;

      (iv)    upstream petroleum sector; and

      (v)    petroleum economics;

      (b)    a representative of the Ministry responsible for finance;

      (c)    a representative of the Ministry responsible for energy;

      (d)    a representative of the Ministry responsible for mining; and

      (e)    a representative of the Attorney-General.

   (2) A person shall not be eligible for appointment as Director of the Board if that person–

      (a)   is not a citizen of Zambia;

      (b)   is an undischarged bankrupt;

      (c)   is adjudged or declared bankrupt under any written law in Zambia;

      (d)   has been convicted of an offence under the Act or any other written law and sentenced to a term of imprisonment exceeding six months without the option of a fine;

      (e)   has been convicted of an offence involving fraud or dishonesty;

      (f)   holds a licence;

      (g)   has an interest in a partnership or corporation that is that holders of a licence.

6.   

7.   Prohibition of publication of, or disclosure of information to unauthorised person

   (1) A person shall not, without the consent in writing given by, or on behalf of, the Board, the Board, publish or disclosure to any unauthorised person, otherwise than in the course of that persons duties, the contents of any document, communication or information whatsoever, which relates to, or which has come to that person’s knowledge in the course of that person’s duties under this Act.

   (2) A person who contravenes sub-regulations (1) commits an offence and is liable, upon conviction, to a fine not exceeding 2,00,000 penalty units or to imprisonment for a period not exceeding two years, or to both.

   (3) A person who, having information which to the knowledge of that person has been published or disclosed in contravention of sub-regulation (1), unlawfully publishes or communicates the information to any other person, commits an offence and is liable, upon conviction, to a fine not exceeding 2,00,000 penalty units or to imprisonment for a period not exceeding two years, or to both.

PETROLEUM (EXPLORATION AND PRODUCTION) REGULATIONS

[Section 50]

[RETAINED UNDER SECTION 15 OF THE INTERPRETATION AND GENERAL PROVISIONS ACT]

Arrangement of Regulations

PART I
PRELIMINARY

   Regulation

   1.   Title

   2.   Interpretation

PART II
BLOCKS

   3.   Graticulation and constitution of blocks

   4.   Closed areas

PART III
BIDS

   5.   Information to be submitted by bidders

   6.   Bid proposals

   7.   Criteria for selection of bidders

   8.   Rejection of bids

PART IV
PETROLEUM OPERATIONS

   9.   Exploration period

   10.   Extensions to exploration period

   11.   Development and production operations

   12.   Mandatory and voluntary relinquishment

   13.   Transfers and assignments

PART V
WORK PRACTICES

   14.   Work practices and directions

   15.   Drilling practices and abandonment

   16.   Construction of pipelines and related facilities

   17.   Measurement

PART VI
RETURNS, RECORDS, PLANS, ETC.

   18.   Notice of commencement

   19.   Quarterly reports

   20.   Annual work programme

   21.   Annual report

   22.   Periodic reports

   23.   Records, accounts, etc., to be maintained

   24.   Final reports

   25.   Modification of duties

   26.   Confidentiality

   27.   Power of entry and inspection

PART VII
FINANCIAL PROVISIONS

   28.   Fees and rentals

   29.   Royalty or production payment

      SCHEDULE

SI 88 of 1985,

SI 165 of 1989,

SI 75 of 1990.

PART I
PRELIMINARY

1.   Title

These Regulations may be cited as the Petroleum (Exploration and Production) Regulations.

2.   Interpretation

In these Regulations unless the context otherwise requires—

"development and production operations" means operations for or in connection with the production of petroleum;

"drilling" means operations for or in connection with the perforation of the earth's surface, whether the hole is vertical, inclined or horizontal; and includes all operations for preventing the collapse of the sides of the hole or for preventing the hole from becoming filled by extraneous materials (including water) and the fitting of wellheads, or coring or logging, and any operations incidental thereto;

"exploration operations" means operations for or in connection with exploration for petroleum;

"field" means an area, as determined pursuant to the terms of a contract, in which a commercial discovery of petroleum has been made;

"graticular section" means a graticular section referred to in regulation 3;

"well" means any opening in the ground made or being made by drilling or boring, or in any other manner, in connection with exploration operations or development and production operations, other than a seismic hole.

PART II
BLOCKS

3.   Graticulation and constitution of blocks

   (1) For the purpose of establishing the blocks referred to in section 23 of the Act, the surface area of the Republic shall be deemed to be divided into graticular sections by reference to meridians of longitude which are five minutes apart measured from the meridian of Greenwich and by reference to parallels of latitude which are five minutes apart measured from the Equator.

   (2) Each graticular section shall be bounded by part of two meridians of longitude which are five minutes apart and by part of two parallels of latitude which are five minutes apart.

   (3) Where a portion of a graticular section includes land in the Republic and land outside the Republic, only that portion of the land in the Republic shall constitute a graticular section for purposes of these regulations.

   (4) Each block awarded to a contractor shall be defined by reference to graticular sections.

4.   Closed areas

For the purposes of section 35 of the Act, the areas declared closed to some or all petroleum operations shall be defined by reference to blocks comprised of graticular sections.

PART III
BIDS

5.   Information to be submitted by bidders

   (1) Every bidder when responding to an invitation for bid shall submit, inter alia, the following information—

      (a)   the name, address and nationality of the bidder;

      (b)   in the case of a corporate bidder—

      (i)   the bidder's place of registration or incorporation, its principal place of business, its board of directors and senior management, the domicile and nationality of the members of the board of directors and its capital structure;

      (ii)   the form of organisation of the bidder, including information concerning the bidder's relationship with its parent company, if any, and other affiliated companies; and

      (iii)   the financial structure of the bidder and its parent company, if any, including annual reports, audited balance sheets and profit and loss statements for the past three years, and any reports which the bidder or its parent company may have filled with government agencies responsible for securities regulation during that period;

      (c)   how exploration and development activities would be financed if the bid is successful and how performance would be guaranteed; and

      (d)   the bidder's previous experience in petroleum exploration, development, production, refining and marketing.

   (2) Where a bid is submitted by a group of two or more persons, the information referred to in sub-regulation (1) shall be submitted for each person in the group.

   (3) Where, following the submission of the information referred to in sub-regulation (1), but prior to the selection of the successful bidder, there has been any change in the information so submitted, the bidder shall forthwith inform the Minister, specifying all particulars of the change.

6.   Bid proposals

   (1) Each bid that is submitted in response to an invitation for bids shall include, inter alia, the following—

      (a)   a description of the block or blocks for which the bid is submitted; and if the bid is made in respect of more than one block, the priority assigned to each block;

      (b)   a detailed description of the exploration programme proposed for the block or blocks for which the bid is submitted;

      (c)   the minimum work and expenditure obligations to be undertaken during the exploration period;

      (d)   proposals with respect to the training of Zambian personnel and expenditures to be incurred therefor;

      (e)   proposals with respect to the sharing of net revenues or production between the bidder and the Government as indicated in the invitation for bids; and

      (f)   such other matters as may be required by the invitation for bids or which the bidder wishes the Minister to consider.

   (2) Additional information on all matters referred to in the preceding sub-regulation shall be promptly supplied by the bidder, if so requested by the Minister at any time after the bid has been submitted.

7.   Criteria for selection of bidders

The following shall be the criteria for the evaluation of bids and selection of bidders for negotiations—

      (a)   the technical competence and experience of the bidder with respect to petroleum operations;

      (b)   the financial resources available to the bidder to fulfil the petroleum exploration, development and production obligations under a contract;

      (c)   the extent to which the bidder will provide advanced technology and skills to the Zambian petroleum industry; and

      (d)   the specific contents of the bid received.

8.   Rejection of bids

No rights of any kind shall be created in favour of any bidder by virtue of the submission of a bid proposal; the Minister reserves the right to accept or reject any or all of the bids without assigning any reason therefor.

PART IV
PETROLEUM OPERATIONS

9.   Exploration period

   (1) The exploration period shall be comprised of—

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