WEEK 3- A.

UPSTREAM
Introduction- Regulatory framework
1. Regulatory Authority
2. Licensing Regime
3. Petroleum Contracting
4. Types of Petroleum Contracts
a) Concessions
b) Product Sharing Agreements
c) Service Agreements
d) Joint Operating Agreement
Regulatory Authority
It is a universal law that provision or ownership of petroleum occurring in the subsoil of the
country belongs to the state. However, there are some countries where on their land territory, the
ownership of the petroleum in the underground either belongs to the owner of the land which
overlies the petroleum accumulation or to no one at all.
In Ghana to be precise, the main regulatory authority or body in charge of the petroleum
framework is Parliament. Parliament is vested with the oversight responsibility to make laws that
are used to govern the state and other of its assets. It exercises the principles of checks and
balances as well. Article 268 talks about Parliament Protecting Natural Resources and it provides
that, “any transaction, contract or undertaking involving the grant of a right or concession by or
on behalf of any person involving the government of Ghana, for the exploitation of any mineral,
water or other natural resource of Ghana, made or entered into after the coming inti force of this
Constitution shall be subject ti ratification by parliament. Thid was seen in the case of Balkan
Energy v Attorney General, where it was held that the Governemnt of Ghana had breached
article 268 of the Constitution and also was meant to be trading.
Ministry of Petroleum
This ministry is also another rbody in charge of the ruglatrot authorities. It is the body in charge
of extending and ensuring a continuous suooly of energy serbices to every divisdion of the
Ghanaian ecxonomy or society in an energy sufficientmanner.
It is again the policy maker when the petroleum sector wants to enter into am agreement with
other marketrs and companies amd also brings out pricing for petroleum prducts.
PETROELUEM COMMISSION, 2011 (Act 821)
Sections 2 and 3 of Act 821 provides for the mandate and powers of the petroleum commission
and section 2 provides the object of the commission and it provides that;
“The object of the Commission is to regulate and manage the utilization of petroleum resources
and to co-ordinate the policies in relation to them.
(ii) plans for the development of petroleum transportation, processing and treatment facilities;
and
(iii) decommissioning plans for petroleum fields and petroleum infrastructure;
Section 3 provides for the function of the commission and they are;
1. To promote, plan, execute and sustain the efficient use f petroleum to the benefit of all
Ghanaians
2. To recommend to the minister better policies related to petroleum activities
3. Monitor and ensure compliance with nat’l policies, laws, etc of petroleum activites, etc
GHANA NATIONAL PETROLEUM CORPORATION (GNPC)

B. THE LICENSING REGIMES

A licnse is either exclusibve or non-exclsuibse. A non-exclsuisive license is available for genral
geological and geophysical work that does not involve drilling and genrally covers a laerge area.
An exclusive license is granted fr exploration work, inclsufing drilling, ffor development work,
and for production and disposal operation.
Heover, the holder of an explotation oicense, hoi kakes ca commercial discovery, is generally
entitled to be granted a production license in respect of the discovery.

PETROLEUM CONTRACTS
These are contract s that binds and organize boith the Internationa Oil Companies (IOCs).
Concession- under this the company is to pay the nation country tax

Product Sharing Agreement-

Service Agrements-
Joint Operating Agreement- here the IOCs decide to come tohgether to go bid fpr a block an d
carry nout the transactions thereafter. They do this s to reduce the burden of cost that eaxch of
the pertoes may doAn operator ought to be chsen from the group so as to help with the contract.
Where the group cannot agree to choose their operator, under section 13 of Act 919, the
minister shall choose their operator fo th,m or select abgorup of indicviduals to represent the
group as a committee or an operator.
1. The operator can or may cal o for cash
2. Liability is borne by all members unkless there is gross negligence on the part of the
operator, then the operator bears the whole risk or liability
 3. Sole Risk is accepted. Thus where a mem=ber of the group decides to go and enter into a
contrat and drill alone,they are allowed to do so.
4. There is a percentage bar set for decision making
5. Walk out is allowed. Howver through noyification of nthe other mebers of the JOA

WEEK 4- UPSTREAM CONT’D

5.Oil and Gas Clause Leases
a) Habendum and Delay Rental Clause
b) The Royalty Clause
c) Implied Oil and Gas Covenants
d) The Mother Hubbard Clause Cover-all)
e) Pugh Clause

The Habendum and Delay Rental Clause

Habendum means the part of a deed or conveyance which states the estate or quyantity of interest
to be granted, eg. The term of a lease. Basically, the rights ti be enjoyed by a lessee of a land or
grantee.
In Federal Oil Co v Western Oil Co, the defendants in 1901 executed and delivered to
complainant a lease the essential elements of which are set forth in the 3rd example of lease
forms. On October 22, the complainant mailed to the lessor a check of $8.75 as required the lease
wghich lssor refused to accept stating he no longer wants to be bound by nthe lease. Rhe lessors
executed a lease of the same premises to Western Oil Co which entered the premises and began
to drill formgas. Complainant seeks to have title to the lease and to enjoy defendants from any
manner asserting any right or adverse or hostle to the leasehold title of the complainat. Bker,
DDistrict Judge said ‘Leases of c oal, stone, and other like materials are corporeal
hereditaiments and constitute an essential part of the land itself, and are capable of present,
absolute grant while Oil and Gas are figurative and volatile ature, a grant of either of which
creates only by an inchoate right, which will become absolute onlyu upon its reduction to
possessin.
The court held that, it cannot enforce this lease because the court cannot allow a particular party
to perform the contract and the other party, at its option, may refuse to carry it. Similarly, the
complainant shall have the right to remove all its property from the demised premises at any
time. Thus, the demurer is sustained and the bill dismissed for want of equity, at the costs of the
complainant and the temporary restraining order heretofore granted is dissolved.
Delay Rental Clause
Is a provision in an oil and gas lease, giving the lessee the right to maintain the lease from period
to period during the primary term by paying dekay rentals instaed of starting drilling operations.
Gthe structure of the habendum clause in coal leases usualy defers from that found in oil and gas
leases and sterns from the nature of the industry.
In Philips Petroleum Co v Curtis, the plaintiffs brought an action agasint the defdndant to quiet
titke to an oil and gas lease. From an adverse judgement, Philips has appealed. Issue, whether
under the facts, whicha re not disputed, Philips was entitled under the equttablbe principles to be
relieved from a termination of the lease due to its filure to pay the delay rental in or before the
time stipulated in th lease. The courtheld that the error was made by an employee of
Philipssubject to its directionl supervision and not by an independent agent, such as the United
States OPost Iffice Department or depositiry bank.

THE ROYALTY CLAUSEE

The raoyalties are ti be oaid vy the lessee whommthe land hgas been granted to either by oaying
it to the owner fir thlnd or paying it to the government.. the royalty for oil shall be paidf in
“kind” wheras gas “in money”. However, both products arepaid in the same manner. i.e after
production is obtained. In Shepherd v Higg, issue arose as to whether a lessor’s retained interest
in premises which had been leased for oil and gas development was subjectto a country ad
valorem realm property tax. The court held that the ffith clause of the hoggihamman contract
provide for that the lessors shall have a certain royalty being 1/8th of the oil in kind and 1/8th of
the gas being in money.

Cobenants Implied in Oil and Gas Leases

Are convenant implied in la or in fact?
A covenant is implied in fact when its existence is derived from the written agreement and the
circumstances surrounding its execution.
A covenant is implied in law when it I added to the contract by a courtbto promote fairness,
justice and equity.
Mother Hubbard Clause

Under the Ghana Model Petroleum Agreement, the habendum clause is posiyte under article 3.
And it has two facesnamely, the Primary Term coivers the exploration period(2-7yrs)

Article 1 of GMPA provides for then Royaltry Clause

Pugh Clase 9Relinquishment) Article 5
Allows the IOC to work on its bloc at the end of its term and if it hasn’t drilled a well, it is
required to give portio of gthe land to GNPC to come and work on it.
FRustraion Clause

WEEK 5- EMERGING ISSUES

a) Local Content
b) Petroleum Revenue Management
i. Transparency and CORRUPTION
c) Environmental Protection
i. Environmental Impact Assessment
d) Decommissioning
e) Arbitration dispute Resolution
f) Human Rights
g) Competition

Emerging Issues
Here after, the IOC or GNPC has come to drill and produce the oil, the problems that come after
all these activities is what is termed as Emerging Issues.
LOCAL CONTENT
Here, the local content means that whenever the IOC or contractor comes to drill, he must
include the local participants or indigenes living in that part of the community and train them I
order to earn a living. The contractor must also ensure that he can use some of the local materials
available to him here in the carrying out of its business.

TYPES OF LOCAL CONTENT

❖ LOCAL CONTENT IN AGREEMENT-here, the foreign investors or IOCs and the host
country Minister or Government will enter into an agreement for there to be the inclusion
of the local indigenes for employment.

❖ LOCAL CONTENGT BY LAW- Here, the Ghanaian government has provided for in
law, Ghanaians should be prioritized in terms f employment in the petroleum industry
and should benefit from the country’s resources.
FORMS OF CONTENT
❖ EMPLOYMENT AND TRAINING OF NATIONALS
Here, the foreign company employs the local participants or indigenes and trains them in order to
handle themselves and teach them how to swim should in case of any frustration they can escape
liability of being injured.
❖ TECHNOLOGY TRANSFER
The local participants or indigenes in the area must be at least good in technology management
such that they can share expertise with that if the foreign company in order to improve efficiency
in the work.
❖ SUPLY GOODS, AND SERVICES BY LOCAL AUTHORITIES
The host country must supply the materials or the goods that is going to be needed by the foreign
investors for their operations. The Ministry in charge must provide fir materials for th lcal
indigenes or people to be able to partake in the work.
❖ RESEARCH AND DEVELOPMENT
The local content authorities must help the IOCs to research ad help in developing the
community which the operations are being carried on in.

CHALLENGES OF THE LOCAL CONTENT

❖ REQUISITE TRAINING/ EDUCATION

The local people may not have the requisite knowledge and technical know-how in using some
of the heavy machineries needed for the jobs. If there are training programs available, then the
local people may be able to benefit from these other than that, they will delay the IOC in
carrying on its business
❖ QUALITY OF GOODS AND SERVICES
The local indigenes may not be able to help bring out the quality of goods to the local authority
may have low quality products or goods and services which may be detrimental to the company
and they may incur some leases.
PETROLEUM REVENUE MANAGEMENT ACT, 2011 (ACT 815) (PRMA)
The Public Interest and Accountability Committee (PIAC) is a citizens-led statutory body
established under Section 51 of the Petroleum Revenue Management Act 2011 (Act 815) as
amended by the Petroleum Revenue Management (Amended) Act, 2015 (Act 893) to provide
independent oversight over the collection, allocation and utilization of Ghana’s petroleum
revenue. PIAC has three main objectives as outlined in Section 52 of the Petroleum Revenue
Management Act (PRMA):
1. To monitor and evaluate compliance with the Act by government and relevant institutions in
the management and use of petroleum revenue and investments.
2. To provide space and platform for the public to debate on whether spending prospects and
management and use of revenues conform to development priorities.
3. To provide independent assessment on the management and use of petroleum revenues to
assist Parliament and the Executive in the oversight and the performance of related functions.
The PRMA provides the framework for the collection, allocation and management of petroleum
revenue in a responsible, accountable, and sustainable manner, for the benefit of the citizens of
Ghana, in accordance with Article 36 of the Constitution.
What is Petroleum Revenue Management?
Petroleum revenue come from two sources, namely, activity related and non-activity related
sources. Activity related sources, called resource rents, represent the value of a petroleum
resource minus all the necessary costs of production. Non-activity related sources represent
general taxation measures applicable to the industry.
Petroleum revenue is influenced by government tax policy and external factors such as oil prices.
Most resource-rich petroleum producing countries have two goals: to attract international oil
companies to invest in exploration and production of their petroleum resources, and the
maximization of wealth from the resources through the revenues collected.
Like any other funds, petroleum revenue requires management rules to enhance effective use.
These rules are often codified into revenue management laws in most oil and gas jurisdictions.
The rules typically cover the establishment and management of a central repository for
petroleum funds, allocations and disbursement from the fund including allocation for current
spending and saving, as well as transparency and accountability mechanisms. Thus, the
petroleum revenue management law provides the framework for the collection, allocation and
management of petroleum revenue in a responsible, accountable and sustainable manner for the
benefit of citizens.
Section 1(1) of the Act provides that, This Act shall regulate the collection, allocation and
management by government of petroleum revenue derived from upstream and midstream
petroleum operations
The purpose of the Act was enacted to provide a framework for the upstream petroleum sector on
the collection, distribution, and management of all revenue associated with the sale or other
commercial activities of oil and gas resources produced in Ghana for the benefit of Ghanaians.
The PRMA makes provision for the responsible use of such revenues, and provides a framework
through which the relevant public agencies are to collaborate. It ensures not only the sustainable
use of the revenues for national development, but also the dissemination of information
regarding all petroleum receipts on a regular basis for public knowledge and consumption.
The PRMA is guided by one major principle: petroleum resources as stipulated in Article 257(6)
of the Constitution belong to the people and is vested in the President in trust for and on behalf
of the people of Ghana. As such, all activities related to such resources must benefit the citizens
of Ghana. It is under this principle that the PRMA makes provision for a public accountability
body (PIAC), which is charged with ensuring that the managers of the resource uphold their
responsibilities in relation to the law.
Section 2 the establishment of the Petroleum Holding Fund
The Petroleum Holding Fund (PHF) is a general account located at the Bank of Ghana, which
serves as the initial repository of all petroleum payments due to the State. As the name suggests,
the amount is simply held there before disbursement. Thus, all allocations and disbursements are
made from the Petroleum Holding Fund.
All revenue due are to be collected and assessed by the Ghana Revenue Authority (GRA), and
paid through direct deposit into the PHF no later than the 15th of each month. Violation of this
provision or failure to deposit by the designated date will be subject to a penalty of 5% of the
original amount owed for each day of default.
In some instances, the government opts to receive payments in petroleum as opposed to cash. In
this ca se, the GRA is tasked with assessing the value of the petroleum received by government
on the specific date received. This is because petroleum prices fluctuate on a daily basis. The
GRA is therefore to record this as a payment received. It is also mandated that the revenues from
the sale of the received petroleum be deposited into the PHF within 60 calendar days after receipt
of the petroleum.
The money lodged in the Petroleum Holding Fund is not kept there permanently but disbursed
according to laid down procedure in the PRMA
Section 3(1) Petroleum revenue due the Republic derived from whatever source shall be
assessed, collected and accounted for by the Ghana Revenue Authority.
Section 4(1) provides for Payment with petroleum in place of cash
Where government elects for payment in petroleum instead of cash, the value of the petroleum in
US Dollars on the day the petroleum is received by or on behalf of the government shall be
reported and recorded by the Ghana Revenue Authority as the payments for the Petroleum
Holding Fund.
Section 5(1) Prohibited use of Petroleum Holding Fund and it provides that’
The amount in the Petroleum Holding Fund earmarked for transfer into the Ghana Petroleum
Funds, shall not be used;
(a) to provide credit to the government, public enterprises, private sector entities or any other
person or entity, and
(b) as collateral for debts, guarantees, commitments or other liabilities of any other entity.
(2) In order to preserve revenue streams from petroleum and ensure the object of this Act, there
shall not be any borrowing against the petroleum reserve.
Section 7 provides for Carried and participating interest
7 (1) Revenue due from the direct or indirect participation of the Republic in petroleum
operations, including the carried and participating interests shall be paid into the Petroleum
Holding Fund.
Section 10 provides for Ghana Heritage Fund (GHF)
The Ghana Heritage Fund provides for an inheritance to support development for unborn
generations when Ghana’s petroleum reserves have been depleted. The funds are invested
outside Ghana in safe investments and the yields are generally low because they are low-risk
investments. The range of qualifying instruments is limited to investment grade bonds and
convertible currency deposits issued by sovereign states, central banks, and multilateral
organisations such as the Bank for International Settlements among others.
The Heritage Fund receives not less than 30 percent of the allocation to the Ghana Petroleum
Funds. Parliament is allowed every fifteen years to review restrictions placed on transfers from
the Heritage Fund and also transfer portions of the accrued interest into any other fund.
Section 11 also provides for Ghana Petroleum Funds: Stabilization Fund and Heritage Fund
The Ghana Petroleum Funds comprise the Ghana Stabilization Fund (GSF) and Ghana Heritage
Fund (GHF). They are the channels through which excess petroleum revenues are deposited for
savings and investments. In terms of disbursement, the law mandates not less than 30% of the
benchmark revenue or actual petroleum revenue in any year to be paid into the Ghana Petroleum
Funds. A minimum of 30% of the revenue accrued to the Ghana Petroleum Funds is transferred
into the Ghana Heritage Fund and the balance transferred into the Ghana Stabilization Fund
Section 12 provides for Withdrawals from the Ghana Stabilisation Fund
Where petroleum revenue collected in any quarter falls below one quarter of the Annual Budget
Funding Amount for that financial year, withdrawals may be made from the Ghana Stabilisation
Fund.
(2)The allowable amount to be withdrawn shall be the lesser of
(a) seventy-five percent of the estimated amount of the short- fall for that quarter; or
(b) twenty-five percent of the balance standing to the credit of the Ghana Stabilization Fund at
the beginning of the financial year.
Section 13 Withdrawals from the Ghana Heritage Fund
Withdrawals from the Ghana Heritage Fund shall be in accordance with the transfer procedures
in section 20

Where do the revenues come from and how are they collected?
Petroleum revenue collected by government is derived from a number of sources. Some are
linked specifically to petroleum extraction activities and others are general levies on
corporations.
Under Act 919 which is the Petroleum (Exploration and Production) Act, 2016 sections 85 to 89
provide for where the revenues are gotten and they are;
❖ Section 85 of Act 919 provides for Payment of Royalties.
Royalties are paid by the oil companies to the State as the owner of the mineral rights. The State,
which is the owner of the resource, is entitled to part of the total production before any
deductions whatsoever are made. The State may opt to take the royalty in cash or kind (oil) and
the practice has been for the State to take it in kind. Where the state elects for payment in kind,
the value of the oil in US dollars on the day the petroleum is received is reported and recorded by
the Ghana Revenue Authority as payment to the State.
❖ Section 86 of Act 919 provides for Annual Fee in Respect of Accreage.
(1) A contractor shall pay the Republic annual acreage fees.
(2) The Minister shall prescribe the amount to be paid, except that where the amount is not
prescribed, the annual acreage fees shall be as provided in accordance with the terms of a
petroleum agreement in respect of the area to which the agreement relates.
(3) This section applies to the Corporation where it undertakes petroleum activities under section
11 (1).

❖ Section 87 of Act 919 provides for Tax or Corporate Income Tax.

A licensee, contractor, sub-contractor and the Corporation shall pay taxes, including petroleum
income tax and capital gains tax in accordance with applicable enactments. This is a tax on the
profits of oil and gas companies. The Petroleum Income Tax Act stipulates a tax rate of 50% but
also provides that a petroleum agreement can provide for some other.
❖ Section 88 of Act 919 provides for Bonus Payments
A contractor shall pay bonus to the Republic as may be prescribed, except that where the type
and quantum of the bonus payable is not prescribed, the bonus shall be paid as otherwise
provided in accordance with the terms of a petroleum agreement in respect of the area to which
the agreement relates
❖ Section 89 of Act 919 provides for Additional Oil Entitlements
The Republic is entitled to a portion of a contractor's share of petroleum produced from each
field on the basis of the after-tax inflation-adjusted rate of return that the contractor achieved
with respect to each field.

ENVIRONMENTAL PROTECTION
Section 1(1) of the Act establishes the agency of environmental protection.
Section 2 provides for the functions of the agency and they are;
(a) to advise the Minister on the formulation of policies on all aspects of the environment and in
particular make recommendations for the protection of the environment;
(b) to co-ordinate the activities of bodies concerned with the technical or practical aspects of the
environment and serve as a channel of communication between such bodies and the Ministry:
(c) to co-ordinate the activities of such bodies as it considers appropriate for the purposes of
controlling the generation, treatment, storage, transportation and disposal of industrial waste;
(d) to secure in collaboration with such persons as it may determine the control and prevention
of discharge of waste into the environment and the protection and improvement of the quality of
the environment;, etc and among others…
Section 4—Governing Body of Agency.
(1) The governing body of the Agency shall be a Board which shall be responsible for the
discharge of the functions of the Agency.
(2) The Board shall consist of the following members appointed by the President in consultation
with the Council of State —
(a) a chairman who shall be a person knowledgeable in environmental matters;
(b) the Executive Director of the Agency;
(c) a representative of the Council for Scientific and Industrial Research, not below the rank of
Principal Research Officer;
(d) a representative of the Ghana Standards Board, not below the rank of Principal Scientific
Officer;
(e) a representative, not below the rank of Director from the Ministries responsible for—
(i) Environment;
(ii) Local Government;
(iii) Finance;
(iv) Health; and
(v) Education;
(f) a representative of the Association of Ghana Industries; and
(g) three other persons at least one of whom shall be a woman.
Section 8—Disclosure of Interest.
(1) A member of the Board who is directly or indirectly interested in any matter being
considered or dealt with by the Board shall disclose the nature of his interest at a meeting of the
Board and shall not take part in any deliberation or decision of the Board with respect to the
matter.
(2) A member who fails to disclose his interest under subsection (2) of this section shall be
removed from the Board
Section 12—Power of Agency to Request for Environmental Impact Assessment.
(1) The Agency may by notice in writing require any person responsible for any undertaking
which in the opinion of the Agency has or is likely to have adverse effect on the environment to
submit to the Agency in respect of the undertaking an environmental impact assessment
containing such information within such period as shall be specified in the notice.
(2) Where the Agency issues a notice under sub-section (1) it shall inform any organ or
department of government that has responsibility for the issue of any licence, permit, approval or
consent in connection with any matter affecting the environment that the notice has been issued,
and the organ or department shall not grant the licence, permit, approval or consent unless it has
been notified by the Agency that the notice has been complied with.
Section 13—Enforcement Notice.
(1) Where it appears to the Agency that the activities of any undertaking poses a serious threat to
the environment or to public health, the Agency may serve on the person responsible for the
undertaking, an enforcement notice requiring him to take such steps as the Agency thinks
necessary to prevent or stop the activities.
(2) An enforcement notice shall specify the offending activity, the steps required to be taken;
and the time within which the steps shall be taken.
(3) The Agency may in an enforcement notice direct the immediate cessation of the offending
activity where it considers that the circumstances so demand.
 (4) Any person who acts contrary to an enforcement notice issued under this section commits an
offence and shall be liable on summary conviction to a fine not exceeding ¢2 million and in
default to imprisonment for a term not exceeding one year.

Section 14—Power of Minister Relating to Enforcement Notice.

(1) Where a person to whom a notice has been served under subsection (1) of section 13 fails to
comply with the directives contained in the notice within the stipulated time or such further
period as the Agency may grant, the Minister, may without prejudice to a prosecution under
subsection (4) of section 13, take such steps as he considers appropriate to ensure compliance
with the notice
ENVIRONMENTAL ASSESSMENT REGULATIONS, 1999
1. (1) No person shall commence any of the undertakings specified in Schedule 1 to these
Regulations or any undertaking to which a matter in the Schedule relates, unless prior to the
commencement, the undertaking has been registered by the Agency and an environmental permit
has been issued by the Agency in respect of the undertaking.
2. No person shall commence activities in respect of any undertaking which in the opinion of the
Agency has or is likely to have adverse effect on the environment or public health unless, prior to
the commencement, the undertaking has been registered by the Agency in respect of the
undertaking.
Environmental impact assessment
4. No environmental permit shall be issued by the Agency for any of the undertakings
mentioned in Schedule 2 to these Regulations unless there is submitted by the responsible
person to the Agency, an environmental impact assessment in accordance with these
Regulations in respect of the undertaking
Application for environmental permit
5. (1) A person required under regulation 1 or 2 to register an undertaking and obtain an
environmental permit shall submit to the Agency an application in such form as the
Agency shall determine. 2. There shall be paid for the application such fee, as the Agency
shall determine. 1. In addition to any information that an applicant is required to provide
on application, the Agency may require an applicant to submit such other information on
the undertaking as the Agency considers necessary for the initial assessment of the
environmental impact of the undertaking.
Registration and issue of environment permit
7. (1) Where the Agency approves an application at the initial assessment, it shall register the
undertaking, the subject of the application, and issue in respect of the undertaking an
environmental permit.
1. Where the Agency on the initial assessment reports that it objects to the application the report
shall constitute a non-acceptance of the application and the undertaking shall not be commenced
or where it is in existence, be discontinued. 1. A determination by the Agency that, an
application at the initial assessment, is approved, objected to, requires the submission of a
preliminary environmental report or the submission of an environmental impact statement, shall
be communicated to the applicant within 25 days from the date of the receipt of the application
for an environmental permit
DECOMMISSIONING
DISPUTE RESOLUTION (ARBITRATION)
HUMAN RIGHTS

WEEK 8- DOWNSTREAM
1. Refinery- Regulatory Framework
a. Regulatory Authority
b. Licensing Regime
2. Transportation & Distribution
3. Sale & Marketing- Retailing of Petroleum Products
a. Regulatory Framework
b. Regulatory Authority
4. Dispute Resolution

Refinery – Regulatory Framework

The National Petroleum Authority Act, 2005 (ACT 691)
Section 1 of Act 691 “there is established by this Act, a body to be known as the National
Petroleum Authority.
Section 2 provides for the Object and Functions of the Authority.
Section 2 (1) The object of the Authority is to regulate, oversee and monitor activities in the
petroleum downstream industry and where applicable do so in pursuance of the prescribed
petroleum pricing formula.
(2) To achieve the object, the Authority shall
(a) monitor ceilings on the price of petroleum products in accordance with the prescribed
petroleum pricing formula;
(b) grant licences to applicants under this Act;
 (c) maintain a register and keep records and data on licences, petroleum products and petroleum
service providers;
(d) provide guidelines for petroleum marketing operations;

Section 3 provides for the Governing body of the Authority

(1) The governing body of the Authority is a Board consisting of the chairperson, the Chief
Executive, one representative of the consuming public other than a person specified in
paragraphs (d) and (e), one representative of the petroleum workers union, one representative of
(i) the Ghana National Chamber of Commerce, or
(ii) the Ghana Chamber of Mines, and
(f) three persons, at least one of whom is a woman and each of whom has specialised knowledge
and experience in matters relevant to the functions of the Authority.
Section 4 of Act 691 provides for the Independence of the Authority
The Authority shall not in the performance of its functions under this Act, be subject to the
control or direction of a person or an authority other than the Minister who may give policy
directions. This means that the authority in itself is independent but when the need be any policy
directions to be given, then the Minister may chip in one or two directions but he does not
control the board in carrying out its objectives and functions.
Section 5 provides for Tenure of office of members
(1) A member of the Board other than the Chief Executive shall hold office for a period not
exceeding four years and is eligible for re-appointment but a member shall not be appointed for
more than two terms in succession.
(2) Where a member of the Board resigns, dies, is removed from office or is for a sufficient
reason unable to act as a member, the Minister shall within one month of the occurrence of the
vacancy notify the President of the vacancy and the President shall, acting on the advice of the
nominating authority and in consultation with the Council of State, appoint another person to
hold office for the unexpired portion of the member’s term of office.
(3) A member of the Board may at any time resign from office in writing addressed to the
President through the Minister.
Section 6 provides for meetings of the board.
(1) The Board shall meet at least once every three months for the despatch of business at the
times and in the places determined by the chairperson.
 (2) The chairperson shall at the request in writing of not less than one-third of the membership
of the Board convene an extraordinary meeting of the Board at the place and time determined by
the chairperson.
Section 7 provides for Disclosure of Interest..
(1) A member of the Board who has an interest in a matter for consideration by the Board shall
disclose in writing the nature of that interest and is disqualified from participating in the
deliberations of the Board in respect of that matter.
(2) A member who contravenes subsection (1) ceases to be a member.
MANDATE OF THE AUTHORITY
Section 18 provides for Revocation, suspension and refusal to renew licence
The Board may revoke, suspend or refuse to renew a licence issued under this Act where the
provisions of this Act is not being complied with or the continued operation of a business or
commercial activity poses a risk to public health, safety and security, the services provided by
the licensee have deteriorated below the required standard.
Section 19 also provides for Notice of Revocation, Suspension or Refusal to issue or Renew
License.
(1) Where the Board intends to revoke, suspend or refuse to issue or renew a licence under this
Act, the Board shall give the applicant or licensee
(a) thirty days prior notice of the revocation, suspension or the intention to refuse to issue or
renew the licence,
(b) reasons for the intention to revoke, suspend or refusal to issue or renew the licence, and
(c) an opportunity to make an oral or written representation to the Board.
(2) An applicant or licensee who receives a notice may make a representation to the Board
within fifteen working days from the date of receipt of the notice.
(3) The Board shall within three months after the representation take a decision on the
representation and inform the applicant or licensee.
(4) The Board shall as soon as practicable inform the Minister in writing of any decision it takes
on a representation.
Section 20 discusses the Register.
(1) The Board shall establish and maintain a register of licences that are granted by the Board.
(2) The Board shall enter in the register in respect of each licence
(a) the name and particulars of the person to whom the licence is granted, and
(b) the business or commercial activity to be engaged in by the licensee.
 (3) The Board shall publish the names and particulars of licensees, periodically in the Gazette as
determined by the Board.
(4) The register shall be opened for public inspection during the hours and subject to the
payment of the fee, that may be determined by the Board.

Section 21 provides for Removal of names from register

(1) The Board shall remove from the register the name of a person
(a) who has failed to comply with the conditions of the licence, or
(b) who has been found guilty of misconduct by the Disciplinary Committee.
(2) The name of a person may be restored to the register by the Board.

Section 22 Publication of licences

The Board shall publish in the Gazette a notice of each licence, suspension or revocation of a
licence made under this Act.

Section 34 Relationship of Authority with other institutions and petroleum service providers
Petroleum service providers and relevant institutions shall
(a) in consultation with the Board, enforce standards of performance in respect of operations in
the petroleum downstream industry, and
(b) ensure conformity with the standards and protocols prescribed by the Board.

Section 35 provides for Refinery and manufacturing processes

The Board shall monitor the refinery and manufacturing processes of petroleum products to
ensure the application of clean and safe technology.

Section 36- Duty to set specifications of fuel products

The Ghana Standards Board shall after consultation with the Board
(a) set the specifications for each type of fuel and fuel related product, and

(b) specify the allowable content of additives in each type of fuel and fuel related product.
Section 37 provides for Submission of reports to Board
(1) Where a petroleum service provider’s operations in the downstream industry involves the
importation, refining and marketing of petroleum products, that petroleum service provider shall
submit a monthly report on a date determined by the Board that indicates details of actual
imports, production, domestic sales and consumption, inventory of crude oil and products, and
exports.
(2) The Board shall within thirty days consider the content of the report and initiate the action to
be taken where necessary.
(3) The report and the decision taken by the Board shall be forwarded by the Board to the
Ministry of Energy.
(4) Despite subsection (1), the Board may require a petroleum service provider to submit a report
to address a specific issue, and to furnish the Board with information in respect of the conduct,
practices, and management by that petroleum service provider related to the business or activity
including relations with other relevant institutions, partnerships and individuals.

Section 38 addresses the Disclosure of information by Board and submission of reports

(1) Subject to this Act and any other enactment, the Board may disclose to the public
information obtained by it in the performance of its functions under this Act.
(2) Despite subsection (1), the Board shall not disclose to a person
(a) a trade secret, and
(b) privileged commercial or financial information, without the prior written undertaking of that
person to keep the secret, information or matter in strict confidence and to use it for the purpose
for which it was sought.
(3) Despite subsection (1), the Board shall not disclose to a person matters that relate to national
security.
(4) The Board shall submit to the Ministry a quarterly report covering the activities and the
operations of the Authority for the period of the year to which the report relates.
Liberalisation of the Petroleum Downstream Industry and Promotion of Fair Competition

Section 11 provides for the Requirement for licence

 (1) A person shall not engage in a business or commercial activity in the downstream industry
unless that person has been granted a licence for that purpose by the Board.
(2) The business or commercial activities of the downstream industry in respect of crude oil,
gasoline, diesel, liquefied petroleum gas, kerosene and other designated petroleum products are;
importation, exportation, re-exportation, shipment transportation, processing, refining, storage,
distribution, sale.
(3) The Authority may, by legislative instrument, limit or expand the scope of activities under
subsection (2).
Section 12 Qualification for licence
A licence under this Act may only be granted to a citizen, or a body corporate registered under
the Companies Act, 1963 (Act 179), or a partnership registered under the Incorporated Private
Partnerships Act, 1962 (Act 152), or a foreign individual or a foreign company in a registered
joint venture relationship with a citizen or a Ghanaian company.
Section 13 Application for licence
(1) A person may apply to the Board for a licence in the manner determined by the Board with
the prescribed fee.
(2) The Board shall, within thirty working days of the receipt of an application, acknowledge
receipt and inform the applicant in writing of the decision of the Board.
(3) The Board shall on satisfaction that an applicant has met all the preconditions including the
payment of the prescribed fee, direct the entry of the applicant’s name in the Register of licences
established under section 20.
Section 14 Conditions of licence
(1) A licence shall not be granted to an applicant unless the applicant has complied with any
other requirement specified by the Board and any other relevant enactment.
(2) A licence granted by the Board is subject to the conditions specified in the licence.
(3) The Board may request from the applicant where necessary,
(a) a clearance certificate or an appropriate permit from the Environmental Protection Agency
and Ghana Standards Board;
(b) evidence of
(i) financial viability for the ownership or operation of the business or commercial activity,
(ii) adequate training, qualification and experience to engage in the business or commercial
activity in accordance with this Act, and
(iii) any other requirements, in the manner and at the times the Board may determine.
Section 15 provides for Issue and renewal of licence
(1) Where an applicant meets the conditions required by this Act for a licence to engage in a
business or a commercial activity in the petroleum downstream industry, the Board shall approve
the application and issue the applicant with the license.
(2) Despite subsection (1), the Board may for reasons in the public interest, public safety or
public security decide not to issue an applicant with a license and shall inform the applicant of its
decision in accordance with subsection (1) of section 19.
(3) A licence issued is valid for the period specified on it and may be renewed upon satisfying
all the conditions for renewal as specified in the license.
(4) An application for the renewal of a license shall be made to the Board not later than sixty
days prior to its expiry and in the manner determined by the Board.
(5) The applicant who seeks to renew a licence shall pay the prescribed fee prior to the issue of
the licence.
Section 16 provides for Display of License
A licence issued under this Act shall be conspicuously exhibited by the licensee in a prominent
place on the business premises of the licensee.
Section 17. Non transferability of licence
A licensee issued with the licence shall not transfer that licence to another person without the
prior approval of the Board.

OFFENCES
Section 43. Formation of cartels and monopolies
(1) The Board shall in the performance of its functions take the necessary measures in
compliance with the Protection Against Unfair Competition Act, 2000 (Act 589) to prevent the
formation of cartels, monopolies and unfair competition in the petroleum downstream industry.
(2) A person or an agent of that person shall not form a cartel within the petroleum downstream
industry.
(3) A person shall not gain, hold or secure a monopoly of a business or commercial activity
within the petroleum downstream industry.
(4) A person who contravenes or fails to comply with a provision of this section, commits an
offence and is liable on summary conviction to a term of imprisonment not exceeding ten years
or to a fine not exceeding five thousand penalty units calculated in a currency determined by the
Minister, or to both the imprisonment and the fine.
Section 44. Cartelisation
(1) A person or an agent of that person shall not indulge in or assist in cartelisation in the
petroleum downstream industry.
(2) For the purposes of this section, “cartelisation” means an agreement, combination of or
concerted action by refiners, importers or dealers or their agents, to
(a) fix prices,
(b) restrict outputs,
(c) divide markets either by product or by area, or
(d) allocate markets either by products or by areas to restrain trade or free competition and
contractual stipulation that prescribes pricing levels and profit margins at variance with the
prescribed petroleum formula.
(3) A person who commits an offence under this section is liable on summary conviction to a
term of imprisonment not exceeding ten years or to a fine not exceeding fifteen thousand penalty
units calculated in a currency determined by the Minister, or to both the imprisonment and the
fine.
Section 46- Right to complain
(1) A person may submit a written or oral complaint to the Complaints Settlement Committee in
respect of the provision of petroleum services or pricing.
(2) The Complaints Settlement Committee shall examine and determine a complaint submitted to
it and take appropriate action within a period not exceeding thirty days from the date of receipt
of the complaint.
(3) A person who has made a complaint to the Complaints Settlement Committee where
(a) no action is taken on the complaint within the period specified, or
(b) that person is dissatisfied with the action taken by the Committee may submit the complaint
to the Board for further investigation.
(4) The Board shall investigate a complaint received by it unless it is of the opinion that
(a) the complaint is trivial, frivolous, vexatious or not made in good faith,
(b) the complaint is the same subject already under investigation, or before a court, or
(c) the complaint is prejudicial to national security.
(5) The Board shall within fourteen working days of the receipt of a complaint make an
appropriate determination together with a statement of reasons for the determination made.
Section 47 provides for dispute settlement
(1) The petroleum service providers in a dispute concerning a contractual matter that arises with
respect to
(a) margins set by dealers,
(b) freight rates for the transportation of petroleum products,
(c) margins set by the liquid petroleum gas distributors, and
(d) any other matter designated by the Board, shall negotiate in good faith to reach an amicable
settlement of the dispute.
(2) Where the dispute cannot be amicably settled through negotiation, the aggrieved party may
submit the dispute to the Board for arbitration.
(3) The Board shall after consultation with the Minister, set up an arbitration panel under the
Arbitration Act, 1961 (Act 38) to arbitrate and settle the dispute.
Section 58. Misapplication of prescribed petroleum pricing formula
(1) A petroleum service provider shall not misapply the prescribed petroleum pricing formula to
result in an overcharge of a petroleum product for a consumer.
(2) A petroleum service provider who contravenes the provisions of subsection (1) commits an
offence.
Section 59. False statements and withholding material information
(1) A petroleum service provider who makes a false statement in respect of a matter under this
Act, commits an offence.
(2) A petroleum service provider commits an offence if that provider in furnishing the Board
with information or producing a document for purposes of this Act or the Regulations
(a) makes a statement which the petroleum service provider knows to be false in a material
particular, or
(b) produces, provides, sends or otherwise makes use of a document which is false or which the
petroleum service provider knows to be false in a material particular.
Section 60. Obstruction or interference with officers and employees of the Authority
A person who unlawfully obstructs or hinders an officer, agent or employee of the Authority
acting in the performance of a function under this Act, or the Regulations commits an offence
and is liable on summary conviction to a term of imprisonment not exceeding ten years or to a
fine not exceeding five thousand penalty units calculated in a currency determined by the
Minister, or to both the imprisonment and the fine.

Section 61. Other offences

 (1) A person who unlawfully destroys or damages equipment, installation or facility for the
refining, storage, bulk transportation, marketing or sale of petroleum products commits an
offence and is liable on summary conviction to a term of imprisonment not exceeding ten years
or to a fine not exceeding fifteen thousand penalty units calculated in a currency determined by
the Minister, or to both the imprisonment and the fine.
(2) A person who commits an offence under this Act for which a penalty has not been prescribed
is liable on summary conviction to a fine of not less than two thousand, five hundred penalty
units and not exceeding fifteen thousand penalty units calculated in a currency determined by the
Minister, or to a term of imprisonment not exceeding ten years or to both the fine and the
imprisonment.
(3) Where an offence is committed by a body corporate under this Act, every director, manager,
partner, secretary or officer of that body corporate, or a person purporting to act in that capacity
is liable on summary conviction to the penalty provided in respect of that offence.
(4) A person shall not be treated as having committed an offence under subsection (2) where that
person proves that the offence was committed without that person’s consent or connivance and
that due diligence was exercised to prevent the commission of the offence having regard to the
circumstances.