Petroleum Mining Act

Chapter number: 
167
In force: 
Yes

 

EDITORS' NOTE: The digital versions of legislation accessible through SeyLII are UNOFFICIAL and provided solely in the interests of increasing access to legal information.  Their currency and accuracy cannot be warranted.  Official versions of Seychelles legislation can only be obtained in hard copy from the Attorney-General’s Chambers, Department of Legal Affairs

 

CONSOLIDATED TO 30 JUNE 2012

 

 

LAWS OF SEYCHELLES

Act 3 of 1976.

S.I. 72 of 1976.

Act 18 of 1976.

Act 23 of 1976.

Act 15 of 1977.

Dec. 6 of 1977.

Act 13 of 1980.

CHAPTER 167

 

PETROLEUM MINING ACT

[26th July, 1976]

 

ARRANGEMENT OF SECTIONS

1.      Short title.

2.      Interpretation.

3.      Vesting of property in petroleum in the Republic.

4.      Restriction on exploring, prospecting or mining for petroleum.

5.      Applications for exploration licences and petroleum agreements.

6.      Exploration licences.

7.      Form, conditions and duration of exploration licences.

8.      Avoidance of exploration licences by petroleum agreements.

9.      Petroleum agreements.

10.    Form and conditions of petroleum agreements.

11.    Notification of execution, assignment etc. of petroleum agreement.

12.    Participation by Government or Government agency.

13.    Rights conferred by exploration licences and petroleum agreements.

14.    Restrictions on exercise of rights.

15.    Compensation for disturbance of rights or damage.

16.    Regulations.

 

?????????????

 

1.      This Act may be cited as the Petroleum Mining Act.

 

2.      In this Act unless the context otherwise requires ?

 

"continental shelf" means the continental shelf of Seychelles and comprises the area defined in section 5 of the Maritime Zones Act;

 

"exploration licence" means an exploration licence granted under section 6;

 

"foreshore" means land which is alternately covered and uncovered by the sea at the highest and lowest tides;

 

"land in Seychelles" means the surface area of the islands of Seychelles, and includes land covered by water and the seabed and subsoil beneath the territorial waters and the continental shelf;

 

"licensee" means a person who is the holder of an exploration licence;

 

"off?shore land" means land in Seychelles covered by the sea but does not include the foreshore;

 

"petroleum" means any naturally occurring hydrocarbons whether in gaseous, liquid or solid state, any naturally occurring mixture thereof, or any naturally occurring mixture of one or more hydrocarbons whether in gaseous, liquid or solid state and one or more of the following, that is to say, water and other fluids;

 

"petroleum agreement" means any agreement made by the Government with any person under this Act for exploring, prospecting or mining for petroleum in or under any land in Seychelles;

 

"prescribed" means prescribed by the Minister under section 16;

 

"public land" means all State land and includes any land forming part of the domaine public, but does not include land held by or from the Republic under any lease.

 

3.     The ownership of all petroleum existing in its natural condition in strata in or under any land in Seychelles is vested in the Republic and the Republic shall, subject to this Act, have the exclusive right of searching and boring for and getting such petroleum.

 

4.      (1)        No person shall explore, prospect or mine for any petroleum on, in or under any land in Seychelles or do any act preparatory to such exploring, prospecting or mining ?

 

(a)     unless he is the holder of an exploration licence; or

 

(b)     unless he is a party to a petroleum agreement in force in respect of such land; or

 

(c)     otherwise than in accordance with the terms and conditions of an exploration licence or a petroleum agreement.

 

            (2)        Any person who contravenes the provisions of this section shall be guilty of an offence and shall be liable on conviction to a fine not exceeding two thousand rupees for each day during which the offence continues and, in addition, the Court may order that any petroleum obtained or any equipment or machinery used by the offender in connection with such offence shall be forfeited to the Republic to be disposed of as the Government may direct.

 

5.      (1)        Every application for an exploration licence or a petroleum agreement shall be made to the Minister.

 

(2)        The provisions of the Schedule hereto shall have effect in relation to applications under this section.

 

6.      (1)        The Government may grant an exploration licence to any person applying therefor in accordance with this Act in respect of any area of land in Seychelles to which the application relates.

 

 (2)       Exploration licences may be granted to different persons in respect of the same area of land in Seychelles, and more than one such licence may be granted to the same person in respect of different areas.

 

7.      (1)       An exploration licence shall be in such form and shall, subject to such modifications, additions or exclusions as the Government may in any particular case deem necessary or desirable, contain such terms and conditions as may be stipulated in the model exploration licence prescribed under section 16, but shall not be transferable.

 

(2)        An exploration licence shall be valid for a period of two years from the date of issue and, subject to subsection (3) shall then expire.

 

(3)        Where the Government is satisfied that exploration work has been carried out on a reasonable scale by a licensee under an exploration licence, it may grant an extension of such licence upon the application of the licensee for such further period or periods as it may think proper and such licence shall continue in force until the expiration of such further period or periods, as the case may be.

 

8.      (1)        Any exploration licence granted in respect of any area of land in Seychelles in relation to which a petroleum agreement is in force shall be void.

 

(2)        Where any petroleum agreement enters into force in respect of any area of land in Seychelles to which any exploration licence relates, such licence and all rights thereunder shall cease to have effect in respect of such area and shall to that extent, but without prejudice to anything previously done thereunder, be void.

 

 (3)       Nothing in this section shall be deemed to give rise to any liability for the payment of damages or other compensation for any loss or damage incurred or suffered by any person by reason only of the operation of this section.

 

9.      (1)        The Government may, by entering into a petroleum agreement with any person applying therefor in accordance with this Act, grant exclusive rights to such person for exploring,  prospecting and mining for petroleum in or under any area of land in Seychelles specified in the petroleum agreement.

 

(2)        Except as provided in subsection (3), the area or areas of land in Seychelles specified in a petroleum agreement shall not in the aggregate exceed ten thousand square kilometres.

 

(3)        The Government may, by two or more petroleum agreements, grant rights under this section to the same person in respect of different areas of land in Seychelles, and it shall be lawful for the Government to enter into a single petroleum agreement with any person where the total area of land in Seychelles in respect of which it is intended to grant rights to that person under this section exceeds ten thousand square kilometres.

 

(4)        Where the total area of land in Seychelles specified in a single petroleum agreement exceeds ten thousand square kilometres, any expenditure or fixed yearly payments calculated in such agreement by reference to an area of ten thousand square kilometres shall, in the performance of such agreement, be increased proportionately in the same proportion as the area so specified in excess of ten thousand square kilomtres bears to the area of ten thousand square kilometres.

 

10.   A petroleum agreement shall be in such form and shall, subject to such modifications, additions or exclusions as the Government may in any particular case deem necessary or desirable, contain such terms and conditions as to fees and royalties and otherwise as may be stipulated in the model petroleum agreement prescribed under section 16.

 

11.   As soon as practicable after the execution, assignment, termination or surrender of any petroleum agreement or of any rights thereunder, notice thereof shall be published in the Gazette and in such other manner as the Government may direct stating the facts of the case, which shall include the name of the person with whom such agreement is made, as the case may be, the name of any assignee, and a description of the area affected by the transaction so notified.

 

12.    (1)    Subject to and in accordance with such arrangements, any, as may be prescribed in that behalf, the Government may, directly or through any agency, participate equally or in such other proportion as may be agreed with the other party or parties to a petroleum agreement in the development, production and marketing in commercial quantities of any petroleum established under such petroleum agreement, and the other party or parties thereto shall be deemed to have consented to such participation notwithstanding that, at the time such petroleum agreement entered into force, neither the extent or manner of such participation nor the time at or within which the option to participate may be exercised had been agreed or prescribed.

 

(2)        References in this section to any person who is a party to a petroleum agreement shall include references to any person to whom the benefit of such petroleum agreement or of any party thereof is lawfully assigned, whether by agreement or by operation of law or otherwise.

 

13.    (1)    Subject to this Act, an exploration licence shall confer on the licensee, his servants or agents the right to enter and remain upon the land specified therein and ?

 

(a)     to search, prospect and explore for petroleum in or under such land;

 

(b)     to bring onto such land and to use any machinery, equipment, vehicles or materials reasonably required for searching, prospecting and exploring for petroleum; and

 

(c)     to construct, erect and lay out such buildings, installation and structures, and to carry out such works, on or under such land as may reasonably be required for the purpose of searching, prospecting and exploring for petroleum.

 

 (2)       Subject to this Act, a petroleum agreement shall confer on the party or parties thereto (including, in the case of any such agreement in respect of which the Government has exercised the power to participate under section 12, the Government) and their servants or agents, the right to enter and remain upon the land specified therein and exclusively ?

 

(a)        to search and prospect for and win petroleum in or under such land and to carry out any operations directly or indirectly necessary therefor or incidental thereto ;

 

(b)        to dispose of any such petroleum;

 

(c)        to bring onto such land and to use any machinery, equipment, vehicles or materials reasonably required for searching, prospecting and exploring for such petroleum; and

 

(d)        to construct, erect and lay out such buildings, installations and structures, and to carry out such works, on or under such land as may reasonaly be required for the purpose of searching for, winning, storing or dispsing of such petroleum.

 

14.    (1)    The rights conferred by any exploration licence or petroleum agreement shall be exercised subject to and in accordance with the terms and conditions thereof and in conformity with the laws of Seychelles including this Act, and shall be exercised in such manner as to ensure that the interests of any owner or occupier of land in respect of which any such rights are exercised are not affected injuriously save to the extent necessitated by the reasonable and proper conduct of any operations carried on under any such licence or agreement.

 

(2)        No person shall exercise any right of entry on any land or of searching, prospecting or exploring for petroleum in or under any land under any exploration licence or petroleum agreement except ?

 

(a)     in the case of public land, with the written consent of the Minister;

 

(b)     in the case of land other than public land, with the consent of the owner and the occupier thereof or, if such consent is, in the opinion of the Minister, unreasonably withheld or cannot, in his opinion, be obtained without unreasonable delay and expense, with the written consent of the Minister.

 

(3)        Where any question arises in any proceedings relating to the exercise of any of the rights referred to in subsection (2), a certificate under the hand of the Minister stating that the written consent of the Minister had been granted or had not been granted, as the case may be, in respect of the exercise of any such right shall be admissible in such proceedings as conclusive evidence of the facts so stated.

 

15.    (1)    The licensee under any exploration licence, or in the case of a petroleum agreement any party thereto other than the Government, shall be liable to pay fair and reasonable compensation for any disturbance of the rights of the owner or occupier of any land or any damage to the surface of land or to any crops, trees, buidings, stock or works thereon caused in the course of or arising out of searching, prospecting or exploring for or winning and getting or keeping stocks of any petroleum under such licence or agreement.

 

(2)        In the event of any dispute arising as to the amount of compensation payable or whether any compensation is payable under this section or as to whom or in what proportions such compensation is to be paid, any person claiming to be entitled to such compensation may apply to the Minister to assess and determine the compensation payable, if any, and the person or persons to whom it is to be paid.

 

(3)        Any claim for compensation under this section shall be notified in writing to the Minister not later than three months after the occurrence of the event or series of events giving rise to such claim or, where the occurence of any disturbance of rights or of any damage could not resonably have been ascertained within such period, not later than three months after such disturbance or damage has been ascertained or, in the opinion of the Minister, has been ascertaind or, in the opinion of the Minister, ought to have been ascertained, whichever is the sooner.

 

 (4)       The award of the Minister in respect of any claim under this section shall be final and shall not be questioned in any court; and the compensation awarded, if any, shall, not later than fourteen days after the publiction of the award in the Gazette, be paid by the person liable therefor to the Minister who shall pay out the same to the persons entitled thereto in accordance with the terms of the award.

 

16.    (1)    The Minister may, by order, make regulations for the better carrying into effect of this Act.

 

 (2)       In particular, and without prejudice to the generality of the power conferred by subsection (1), regulations made under this section may provide for all or any of the following matters ?

 

(a)     a model exploration licence and a model petroleum agreement;

 

(b)        the form of any document to be used for any of the purposes of this Act;

 

(c)        the fees to be paid in respect of exploration licences and petroleum agreements and in respect of such other matters as may be prescribed for the purposes of this Act;

 

(d)        the duties, privileges and powers of any public officer or other person lawfully appointed for the purpose of administering or assisting in the  administration of this Act or any of the provisions thereof;

 

(e)        the prevention of fires and the establishment of safty areas in relation to any operations carried out under any exploration licence or petroleum agreement or otherwise in relation to peroleum;

 

(f)        the safety, health, working conditions and welfare of persons employed in connection with any operations carried out under any exploration licence or petroleum agreement;

 

(g)        the amendment of the Schedule hereto;

 

(h)        prescribing anything permitted or required to be prescribed under this Act;

 

(i)                 the holding of inquiries to investigate the occurrence of any accident involving loss of human life or serious injury to persons in the course of any operations carried on under any exploration licence or petroleum agreement, including provision for the attendance of witnesses, the administration of oaths, the production of documents and other matters relating to any such inquiry;

 

(j)         the protection of the environment;

 

(k)        the taking of measures to avoid pollution;

 

(l)         the taking of measures to protect shipping lanes and to provide for the general safety of shipping.

 

(3)        Regulations under this section may provide in respect of any contravention thereof that the offender shall be guilty of an offence and liable to a fine of R100,000 or in the case of a continuing offence, to a fine of R20,000 in respect of each day during which it continues and to imprisonment for 2 years.

 

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SCHEDULE

(Section 5)

 

PROCEDURE FOR APPLICATIONS FOR EXPLORATION LICENCES AND PETROLEUM AGREEMENTS

 

1.         Every application shall be in English and shall be addressed to the Minister in the first instance in the form set out below.

 

2.         Every application shall be accompanied by the fee prescribed in that behalf under section 16.  The fee shall not be refunded to the applicant.

 

3.         Separate applications shall be made where an exploration licence or a petroleum agreement is required in respect of two or more areas separately.

 

4.         There shall be attached to the application five copies of a map of the lands in question, and the boundaries of the area or areas to which the application relates shall be clearly marked thereon.

 

5.         The applicant shall furnish such evidence as the Minister may reasonalby require in order to establish whether the applicant is adequatley financed and qualified to carry out a programme of exploration on a scale satisfactory to the Minister.

 

6.         Every application, and any information furnished therewith, shall be submitted by the Minister to the Government for final decision and all such information shall be treated as confidential.  The Minister shall request the applicant to submit such further information relating to the application as the Government may direct.

 

 

7.         A request made by the Minister for information shall be in writing and shall be addressed to the applicant at the address shown on the application form and shall be served by ordinary pre?paid post.

 

8.         If an applicant fails to furnish information to the Minister within two months from the date on which the request therefor is posted, the application shall lapse and become void without further notice to the applicant.

 

9.         In the case of an application for a petroleum agreement, the Minister shall notify the applicant in writing of the decision of the Government and, where the application is granted, of the date of the decision and the terms thereof.  Such notice shall be served by ordinary pre?paid post.

 

10.       Where an application for a petroleum agreement is granted, the agreement shall be executed by the applicant not later than two months after the date of the decision of the Government granting the application.  Where the agreement is not so executed, the application shall lapse and the said decision shall become void upon the expiry of the period of six months:

 

Provided that the Government may extend the time allowed for execution of the agreement where it is satisfied the delay is not attributable to the fault of the applicant.

 

11.       Nothing herein shall prevent an applicant from submitting an application de novo in place of an application which has lapsed but any such subsequent application shall be treated in all respects as an original application.

 

12.       The applicant for a petroleum agreement shall furnish details of his proposed programme of work for (a) the first five years and (b) the subsequent five years giving full details of his proposed work and exploration programme and his proposed capital expenditure expressed in terms of annual estimates.

 

_______________________

GOVERNMENT OF SEYCHELLES

PETROLEUM MINING ACT

APPLICATION FORM

 

TO:

Principal Secretary,

Office of Minister responsible for Petroleum Mining,

Seychelles.

 

This application is for:         BAN EXPLORATION LICENCE (Delete as

A PETROLEUM AGREEMENT   inapplicable)

 

1.         Name of Application (s):              1)       .................................

                                                                  2)       .................................

                                                                  3)       .................................

                                                                  4)       .................................

 

2          (a)        If Individual(s) state address, nationality and occupation:

                         1)      ..............................................................

                         2)       ..............................................................

                        3)       ..............................................................

                        4)       ..............................................................

 

            (b)        If a body corporate, state:

 

Law of incorporation .......................................................

Country of registration ....................................................

Principal place of business ...............................................

Address for service of notices etc. .....................................

Authorised agent in Seychelles (if any) ..............................

Nature of Business .........................................................

 

Name and Nationality of each            1) ..................................

director                                                2) ..................................

3) ..................................

4) ..................................

5) ..................................

Name of each principal

shareholder and percentage

shareholding                                                    .................................

.................................

 

3.         Situation of area or areas

of which application is made

giving reference numbers in                            ...................................

accordance with map supplied                         ...................................

 

4.         Brief particulars of previous

experience in petroleum

            prospecting or oilfield                                     ...................................

            development work                                          ...................................

 

5.         Names and qualifications

            of technical experts or                                     ...................................

            advisers                                                           ...................................

 

6.         Brief particulars of interest

            in and access to refining

            and marketing facilities                                    ...................................

            outside Seychelles.                                          ...................................

 

7.         Give full details of proposed

            works programme as set out in                        ...................................

            paragraph 12 of the Schedule                          ....................................

 

I/We hereby declare that all the foregoing particulars are correct.

 

 

Signature(s) of Applicant(s)  ...............................

                                                                                       ...............................

 

 

????????????

LAWS OF SEYCHELLES

PETROLEUM MINING ACT

CHAPTER 167

SUBSIDIARY LEGISLATION

SECTION 16

 

S.I. 64 of 1976.

S.I. 52/1986.

S.I. 6 of 1990.

PETROLEUM MINING REGULATIONS

[26th July, 1976]

 

ARRANGEMENT OF SECTIONS

1.      Citation.

2.      Reference map.

3.      Deposit of reference map.

4.      Model petroleum agreement.

5.      Model exploration licence.

6.      Fees.

7.      Bond.

 

???????????

 

1.   These Regulations may be cited as the Petroleum Mining Regulations.

 

2.      (1)        The Minister shall cause to be prepared a reference map showing land in Seychelles divided into numbered areas, each of which shall be known as a “block”.

 

(2)        For the purpose of dividing land in Seychelles into blocks, the surface of the earth shall be deemed to be divided-

 

(a)                by the meridian 55°E of Greenwich and by meridians that are at a distance from that meridian of ten minutes, or a multiple of ten minutes of longitude; and

 

(b)               by the latitude of 5° and by parallels that re at a distance from that parallel of twenty minutes, or a multiple of twenty minutes, of latitude,

 

into sections, each of which is bounded-

 

(c)                by portions of two of those meridians that are at a distance from each other of ten minutes of longitude; and

 

(d)               by portions of two of those parallels of latitude that are at a distance from each other of twenty minutes of latitude.

 

            (3)        For the purposes of these regulations, a graticular section constitutes a block.

 

3.      (1)        The reference Map prepared pursuant to regulation 2 shall be deposited at the office of the Director of Surveys.

 

         (2)        The Minister may certify a map to be a true copy of the reference map prepared pursuant to regulation 2 and any such copy shall be received in all proceedings as evidence of the contents of that reference map.

 

         (3)        A reference in an exploration licence or a petroleum agreement to a numbered block, or to part of a numbered block, shall be treated as a reference to the block, or part of the block, so numbered on the reference map prepared pursuant to regulation 2.

 

4.      The agreement in the First Schedule is the model petroleum agreement in the case of exploring or mining for pertroleum in offshore land.

 

5.      The licence in the Second Schedule is the model exploration licence in the case of exploring for petroleum in offshore land.

 

6.      (1)        The fee to be paid in respect of a petroleum agreement is Rs.1,000.

 

         (2)        The fee to be paid in respect of an exploration licence is Rs5,000.

 

7.      The Minister may require an applicant for a petroleum agreement or an exploration licence to execute a bond in such form as the Minister approves before a petroleum agreement is entered into with, or an exploration licence is granted to that applicant, for the performance by the applicant of all or any of his obligations under the agreement or licence.

 

 

__________________________

FIRST SCHEDULE                    Reg. 4

 

MODEL PETROLEUM AGREEMENT

 

THIS Agreement is made the ……………………… day of …………… 19, BETWEEN the Government of the Republic of Seychelles (in this agreement called “The Government”) of the one part AND ………………….

……………………………….……………………………………………………………………………..

(in this Agreement called “the Company” which expression shall where the context allows include its assigns) of the other part;

WHEREAS-

(a)                The Company has made an application under the Petroleum Mining Act for a petroleum agreement in respect of certain lands referred to in the First Schedule to this agreement; and

(b)               The …………………………………… has agreed to enter into a petroleum agreement under the terms and with the benefits of but subject to the provisions of this agreement:

 

            NOW THIS AGREEMENT WITHNESSETH AS FOLLOWS:

 

1.         (1)        In this agreement, unless the context otherwise requires-

 

“appraisal well” means a well drilled after the discovery of hydrocarbons to delineate the limits of the field on the same geological entity within the same structural or stratigraphic closure as the discovery;

 

“associated natural gas” means natural gas produced from any well in the scheduled lands the predominant production of which is crude oil and which is separated from crude oil in accordance with normal oil field practice, including the free gas cap, but shall exclude any liquid hydrocarbons extracted from such gas either in normal field of separation, dehydration or in a gas plant;

 

“casinghead petroleum spirit” means any liquid hydrocarbons obtained in Seychelles from natural gas by separation or by physical or chemical process;

 

“condensate” means a naturally occurring mixture consisting chiefly of pentane and other heavier hydrocarbons, which may contain other substances, which is extracted or is extractable from a deposit through normal exploitation drilling and which, although even if found in the gaseous state in a deposit, presents itself in liquid state under normal conditions or pressure and temperature;

 

“crude oil” or “crude” means hydrocarbon in liquid form as recovered at the well head before it has been refined or otherwise treated but excluding water and foreign substances;

 

“development phase” means the phase commencing and ending as provided in Clause 4(2)(b);

 

“development well” means a well drilled within the presently known or proved productive area of a pool (reservoir) as indicated by appropriate interpretation of subsurface date, drilled to the depth of the stratigraphic horizon known to be productive with the objective of obtaining hydrocarbon from that pool (reservoir).

 

“exploration phase” means the phase commencing and ending as providing in Clause 4(2)(a);

 

“exploratory well” means a well drilled in the exploration phase with the object of exploring for the undiscovered hydrocarbons on a geological entity (be it of structural, strati-graphic facies or pressure nature) penetrating all prospective horizons at the particular location that be within the terms of the work programme.  The well to be drilled to a depth or strati-graphic level defined in the work programme;

 

“Minister” means the Minister responsible for petroleum mining;

 

“natural gas” means hydrocarbons in gaseous form as recovered at the well head but excluding water and foreign substances;

 

“non-associated natural gas” means free natural gas not produced in contact with or dissolved in crude oil and obtained from any well the predominant production of which is natural gas;

 

“Scheduled Lands” means subject to sub-clauses (3), (4), (6) and (7), the lands specified in the First Schedule to this Agreement.

 

(2)        Any expression which is defined in the Petroleum Mining Act shall, unless the context otherwise requires, have the same meaning when used in this Agreement.

 

(3)        A reference in this Agreement to the Scheduled Lands-

(a)        does not include a reference to any part of the Scheduled Lands that is from time to time surrendered under this Agreement; or

 

(b)        includes any area re-included in the Scheduled Lands pursuant to clause 7 or added to or included in the Scheduled Lands pursuant to Clause 11.

 

(4)        In the vent of the inclusion by inadvertence in the Schedule Lands of any area over which, it is proved, the Government was not entitled to enter into a petroleum agreement with the Company, that area shall be deemed to have been surrendered on a date determined by the Minister, and after that date a reference in this Agreement to the scheduled Lands shall not include a reference to that area.

(5)        In this Agreement a reference to a year of the term of this Agreement is a reference to a period of one year commencing on the date hereof or on any anniversary of that date unless otherwise stated.

(6)        The following islands within the Scheduled lands are excluded from the Scheduled Lands, namely …………………………………………

………………..…………………………………………………………………………………………………

            (7)        The exclusion of an island under sub-clause (6) includes the foreshore of the island and the surrounding sea to a depth of …………………………………………………………………………………………………………………..

 

2.      In consideration of the covenants and agreements on the part of the Company hereinafter contained, the Government hereby grants to the Company the exclusive rights for exploring and mining for petroleum in the Scheduled lands during the continuance of this Agreement, subject to the provisions hereof.

 

3.      Subject to the Petroleum Mining Act the Company shall have and may exercise in accordance with and subject to this Agreement the rights referred to in section 13(2) of that Act.

 

4.      (1)        Subject to sub-clause (3), this Agreement unless sooner determined, shall be and continue in force for the term of 28 years from the date hereof.

         (2)        Subject to this Clause, this Agreement has two phases, namely-

(a)        subject to Clause 5(4) an exploration phase which commences on the date hereof and, unless this Agreement is sooner determined expires at the end of eight years; and

(b)        a development phase in respect of a petroleum field which commences on the date on which commercial viability of the field is decided pursuant to sub-clause 10(3) and (4) and, unless this Agreement is sooner determined, expires at the end of the term of 28 years referred to in sub-clause (1).

            (3)        This Agreement shall determine automatically if, before the end of the eighth year of the term of this Agreement, no commercial discovery is made pursuant to Clause 10.

 

5.      (1)        The Company shall within one month after the expiration of the fifth year of the term of Agreement, surrender so much of the Scheduled Lands (if any) as, together with any part of the Scheduled Lands surrendered under Clause 6, amount to 50 per centum of the area of the Scheduled lands at the date hereof.

 

(2)               Nothing in sub-clause (1) shall be taken as requiring the Company to surrender any part of the Scheduled lands within the boundaries of a petroleum field (if then determined) and accordingly the reference in that sub-clause to the Scheduled Lands to be surrendered is a reference to Scheduled Lands outside the boundaries of the petroleum field, as determined under Clause 11.

(3)               The Company shall, within one month or such longer period as the Minister may allow, after the eighth year of the term of this Agreement surrender any part of the Scheduled lands that is not within the boundaries of the petroleum field, as determined under Clause 11.

 

   6.      The Company may voluntarily surrender any part of the Scheduled Lands if it gives two months notice of its intention to do so to the Minister and complies with Clause 8.

 

   7.      (1)        Any part of the scheduled Lands surrendered under Clause 5 or 6 may at a subsequent date, on the request of the Company, be re-included in the Scheduled Lands if the part concerned is not the subject of a petroleum licence or a petroleum agreement and the Minister agrees to the re-inclusion.

            (2)        If the re-inclusion in the Scheduled Lands of any part of the Scheduled Lands that has been surrendered would increase the area of the Scheduled Lands to more than fifty per centum at the end of fifth year the Company shall, as a condition of the re-inclusion, surrender so much of the Scheduled Lands as is necessary to reduce their area to that 50 per centum, of the Scheduled Lands.

            (3)        The –re-inclusion of land surrendered in the Scheduled Lands shall not prejudice the right of the Government to dispose of the data acquired in respect of the re-included land prior to the surrendering of such land, as it thinks fit.

 

   8.      (1)        Every part of the Scheduled Lands surrendered under this Agreement by the Company shall be bounded by lines of parallels of latitude and longitude expressed in whole degrees, and whole minutes.  Except with the approval of the Minister, no boundary line shall be drawn less than five minutes of latitude and five minutes of longitude.

 

            (2)        As far as practicable, each surrendered area shall form one continuous area and be continuous with any previously surrendered area.  Subject to sub-clause (3), no single surrendered area shall be less than 900 square kilometers or 25 per centum of any continuous area within Scheduled Lands, whichever is the less.

            (3)        The Minister may, where he considers it to be in the national interest, allow the surrender of a lesser portion of the Scheduled Lands than the area specified in sub-clause 2.

            (4)        No part of the Scheduled Lands shall be surrendered unless the obligations assumed in respect of that part have been met.

            (5)        Before surrendering under this Agreement any part of the Scheduled Lands, the Company shall consult with the Minister in order to ensure that all the requirements of this Clause are complied with.

 

   9.      (1)        Subject to the other provisions of this Agreement, the Company shall carry out with expedition and due diligence in the Scheduled Lands in any period referred to or identified in Part I of the Second Schedule to this agreement the programme specified in that Part in respect of that period.

            (2)        Where the Company fails to carry out any part of the programme specified in Part 1 of the Second Schedule to this Agreement, then without prejudice to any other right which the Government may have under this agreement in respect of that failure, Part II of that Schedule shall apply for the purpose of determining the amount (if any) payable by the Company to the Government for that failure, it being agreed that the amount so payable represented the loss to the Government by reason of the failure and is not a mere penalty.

            (3)        For so long as exploration phase continues, the Company shall, within one month after the end of each year of that phase, submit to the Minister a report giving particulars of the exploration carried out in that year and in the event that the Programme specified in Part 1 of the Second Schedule to this agreement in respect of that year was not carried out, thereport shall refer to the failure and give the reasons therefor.

(4)                  Where, at the commencement of the development phase, any portion of the work programme undertaken pursuant to the exploration phase remains outstanding, such portion of the work programme shall pertain to acreage outide the defined boundaries of the field.

 

10.       (1)        The Company shall report to the Minister within twenty four hours in respect of any of the following circumstances:

  (a)        where a well shows the presence of hydrocarbons; or the wireline log/logs indicate/indicates the presence of hydrocarbons;

(b)        when a drill stem test has been carried out on a well from which flows petroleum.

            (2)        Following the report pursuant to sub-clause (1), the Company shall submit a detailed report within forty five (45) days thereafter to the Minister.  The report shall contain a statement indicating whether or not in the opinion of the Company the presence of hydrocarbons is of potential commercial interest.  Where appropriate, this report shall also contain:

(a)        all the relevant geological information including the log evaluation;

(b)        basic reservoir data, including drill-stem tests date;

(c)        the Company’s estimate as to the potential of the reservoir; and

(d)        chemical and physical analyses.

            (3)        (a)        Were the Company states in the report referred to in sub-clause (2) that the presence of hydrocarbons is not of potential commercial interest, the Minister may, by notice served in on the Company, direct that the geological structure comprising the discovery area be relinquished.

(b)        The Minister shall not give a direction under sub-clause 3(a) unless-

(i)         he has given to the Company notice of his intention to do so;

(ii)        he has specified in that notice a date before which the Company may make in writing representation with respect to that intention; and

(iii)       on evidence available to him and after taking into account any representations so made, he is of the opinion that the discovery is of potential commercial interest.

(c)        A direction under sub-clause 3(a) may be given only within the period of twelve (12) months after the date on which the report referred to in sub-clause (2) is submitted to the Minister stating that the presence of hydrocarbons is not of potential commercial interest.

(4)        (a)        The Company shall, where it is of the opinion that the presence of hydrocarbons is of potential commercial interest, submit for the Minister’s approval within ninety (90) days of the discovery an appraisal programme including drilling of appraisal wells or a reasonable explanation for any delay in submission of such programme.

            (b)        The Company shall, within two years after the receipt of approval of the appraisal programme by the Minister or such longer period as the Minister may allow, submit a full report if the results of the appraisal programme, including the location, depth, estimated daily potential, commercial capacity of the field discovered, estimated recoverable reserves and such other supporting data which the Company may consider to support the report.  The Minister may require the Company to supply such further information with respect to the report as he sees fit.

            (c)        Within three months of the submission of the report, referred to in sub-clause (4)(b), or such longer period as the Minister may allow, the company shall discuss the report with the Minister with a view to arriving at a decision on the commercial viability, or otherwise, of the field.

 

(5)        (a)        If the Company and the Minister cannot agree on whether or not the field is commercially viable, the Minister may cause an independent evaluation of the field to be carried out.  If the result of such an evaluation are positive and the Minister is satisfied that the field could be developed on a viable basis, he may require the Company to relinquish the area of the field within six (6) months of service of a notice to that effect on the Company.

(b)        Before the Minister serves such a notice on the Company, he shall submit the result of the evaluation to the Company for consideration and review of its position.  Where the Company, within a period of three (3) months of receipt of the results of the evaluation, reviews its position and notifies the Minister of its intention to develop the field, the Minister may allow the Company to do so on such additional consideration as he deems fit.

(c)        For the purposes of sub-clauses 3(a) and 5(a), the determination of the area to be relinquished shall be made pursuant to Clause 11 in the same manner as though the Company had considered the discovery commercial.

            (6)        For the purpose of this clause a discovery of petroleum shall be treated as a discovery of petroleum which is commercially viable, if:

(a)        the commencement of production of petroleum in the area occupied by the petroleum would be technically possible; and

(b)        having regard to relevant commercial consideration including, but not limited to, the quantity and gravity of the petroleum, the place and depth of its location, the potential development and production costs and market, such production would be economic.

 

   11.    (1)        The Minister and the Company shall, as soon as possible, and in any event not later than 90 days after the decision in respect of commercial viability of the field has been taken pursuant to Clause 10, meet to determine the boundaries of the area occupied by the petroleum field.

            (2)        Following the determination of a petroleum field and as soon as practicable, and in any event not later six (6) months thereafter pursuant to this clause, the Company shall submit to the Minister for his approval a technological scheme (hereinafter referred to as the “development plan”) for the development of the petroleum field prior to the commencement of the development of the said petroleum field.

            (3)        The development plan referred to in sub-clause (2) shall contain the following provision:

(a)        a technical and economic appraisal of the alternatives for developing the field and transporting the petroleum, with a justification for the methods proposed;

(b)        details of the proposed drilling programme, including the type of wells, number, location, and completion methods;

(c)        details of the proposed production facilities, including production platforms, if any, production, separation of storage facilities;

(d)        details of the proposed transport system;

(e)        details of onshore installations such as terminal and office facilities;

(f)        a detailed forecast of annual capacity and operating costs;

(g)        a detailed work plan relating to the work completed in each time period to the expenditure forecasts; and

(h)               separate production profiles for crude oil, natural gas and natural gas liquids (including condensate).

            (4)        The development plan shall not be altered in any material way by the Company subsequent to its approval by the Minister without his prior approval.  Nothing in this sub-clause shall be construed as preventing the Company from making adjustments relating to any year covered by the Plan as originally approved within percentage limits of five per centum with respect to matters in the development plan covered by (f), (g), and (h) of sub-clause (3) without the prior approval of the Minister.  All such modification shall be reported to the Minister promptly.

 

   12.    (1)        The Company shall co-operate with the Government with respect to the exercise by the Government of the opinion to participate conferred by section 12 of the Petroleum Mining Act.

            (2)        The Government may participate in the development of a petroleum field to an amount of 50 per cent or in such other maximum percentage as is agreed between the parties.

            (3)        Not later than six months after the submission to the Minister of the development plan the Minister, on behalf of the Government, shall serve a notice on the Company regarding the extent to which the Government wishes to participate in the development programme.

            (4)        The Government may participate directly or through such authority as the Government stipulates and any reference in this Agreement to participation by the Government, howsoever expressed, includes a reference to participation by the Government either directly or through such an authority.

            (5)        Government participation shall commence after the Company has earned an agreed rate of return on its initial investment in the field, in accordance with the Third Schedule to this Agreement.

            (6)        There shall be included in the instrument of agreement relating to participation by the Government if the government so requests, a provision to the effect that the Company shall, to the extent and in the circumstances stipulated by the Government, purchase from the Government at market value, any crude oil to which the Government is entitled under the joint venture.  For the purposes of this Clause, market value has the same meaning as defined in Clause 17 herein for the quarter in which the purchase was made.

 

   13.    (1)        Except as provided in this Clause, the Government shall not be required to give any consideration for, or to incur any liability in respect of, its participation pursuant to Clause 12 in a development programme.

            (2)        If the Government so participates it is not liable for any expenditure, including development or operating expenditure incurred before the “first participation time” as defined in the Third Achedule.

            (3)        The Government shall not incur any liability as a result of participation pursuant to clause 12 in a development programme unless it derives revenues as a result of such participation, and its liability in any year shall not exceed the amount of the revenue so derived in that year.

            (4)        The amount which the Government is liable to pay under this Clause shall be the appropriate proportion of any expenditures incurred in relation to the petroleum field after the first participation time plus any interest incurred under the provisions of sub clause (5).  This amount shall be a first charge on fifty (50) per cent of any annual net profits derived by the Government as a result of its participation in a development programme.

            (5)        If the Government so participates then, subject to clause (3), there is payable by the Government to the Company interest at the rate of …………………………. Per centum per annum, upon costs, expenditures and interest to which the Government is liable under sub clause (4) and which remains unpaid.

            (6)        For the purposes of this Clause-

“appropriate proportion” means the same proportion as the proportion of the Government’s participation in the development programme;

 

“development expenditure” means expenditure incurred on the development and production of petroleum in the petroleum field;

 

“exploration expenditure” means exploration and appraisal expenditure directly associated with the establishment of petroleum in a commercial quantity in the petroleum field;

“operating expenditure” means all expenses other than exploration expenditure and development expenditure which are incurred in the production of petroleum;

 

“liability” means the amount which the Government or Authority through which the Government participates is liable by reason of its participation in a development programme in the form or comprising of operating expenditure, development expenditure and royalty;

 

“petroleum field” means the area within the boundaries of the petroleum field determined under Clause 11.

 

   14.    (1)        The Company shall pay to the Government in respect of each year of the term of this Agreement a rent calculated as provided in the Fourth Schedule to this Agreement.

            (2)        Payment of the rent referred to in subclause (1) shall be made annually in advance, the First such payment being due on the execution of this Agreement.

            (3)        Where an amount of rent under this Agreement is not paid as provided by sub-clause (2), there is payable to the Government by the Company an additional amount calculated at the rate of two per centum per month or part thereof upon the amount of rent from time to time remaining unpaid, to be computed from time to time when the rent became payable until it is paid.

 

   15.    Subject to this Agreement, the Company shall pay to the Government the sums specified as bonuses in the Fifth Schedule to this Agreement at the times such bonuses fall due as also specified in that Schedule.

 

   16.    (1)        Subject to this Agreement, the Company shall pay to Government in respect of each quarter of year in which this Agreement is in force (hereinafter in this Agreement referred to as a “royalty period”) a royalty at the prescribed rate in respect of all petroleum won and saved in the Scheduled Lands in that period.

            (2)        Where this Agreement determines under any of the provisions hereof during, but before the expiration of, a royalty period, the period between the expiration of the immediately preceding royalty period and the determination of this agreement shall be deemed to be royalty period.

            (3)        The royalty rate shall be 12 ½ per centum of the total crude oil won and saved valued in accordance with Clause 17, or such other rate as the Minister may prescribe.

 

   17.    The quarterly f.o.b. market value of crude oil shall be determined as follows:

(a)        In the event of 50% or more of the total sales of crude oil in that quarter by Government and/or the Company have been made under third party arms length sales it shall be the weighed average price per barrel realized under such sales.

(b)        In the event that less than 50% of the total sales of crude oil by Government and/or the Company have been made under third party arms length sales the fair market value shall be determined by the average of-

(i)         the weighed average price per barrel realised of third party arms length sales, if any; and

(ii)        the weighed average prices per barrel at which major competitive crude oils of generally similar quality to that of Seychelles crude oil were sold in international markets during the relevant quarter, adjusted for differences in quality, quantity, gravity and contract terms,

 

weighed by the percentage volume of total sales that were, and as the case may be, were not third party arms length sales.  For the purpose of this Clause third party arms length sales shall exclude oil exchanges, barter deals, or restricted or distress transaction and more generally any crude oil transaction which is associated with special financial or commercial considerations.

(c)        In the event of any differences of view between the Company and Government the manner in which the prices are to be determined according to the provisions of sub clause (b) above the matter or matters in dispute shall be finally resolved by a sole expert appointed by agreement between Government and the Company or, in the absence of such agreement by the International Chamber of Commerce.

 

   18.    Royalty under this Agreement is not payable in respect of petroleum that-

(a)        the Minister is satisfied was unavoidably lost before the quantity of that petroleum was ascertained;

(b)        is used by the Company for the purpose of petroleum exploration operations or operations for the recovery of petroleum;

(c)        with the approval of the Minister, is flared or vented in connection with operations for the recovery of petroleum.

 

   19.    (1)        The Company shall, within one month after the end of a royalty period, deliver to the Minister, in such form as the Minister may specify, a statement of-

(a)        the quantity of crude won and saved in the Scheduled lands in that period;

(b)        the quantity of that crude to which any of the provisions of Clause 18 apply, specifying the provision;

(c)        the quantity of that crude disposed of by sale before the end of that period and

(i)         the person to whom it was disposed of;

(ii)        in the case where 50% or more crude is disposed of sales at arms length, the weighed average f.o.b. price received or receivable for the petroleum as provided for under Clause 17(a);

(iii)             in the case where less than 50% crude is disposed of in sales at arms length, the market value as provided for under Clause 17(b); and

(d)        the quantity of that crude not disposed of or disposed of otherwise than by sale before the end of that period and the market value of the crude determined with due regard to Clause 17; and

(e)        any other matters which the Minister may from time to time reasonably require.

 

   20.    (1)        The Company shall measure or weigh by a method or methods customarily used in good oilfield practice and from time to time approved by the Minister all petroleum won and saved from the Scheduled Lands.

            (2)        The Company shall not make any alteration in the method or methods of measurement or weighing used by it or any appliances used for that purpose without the consent in writing of the Minister and the Minister may in any case require that no alteration shall be made save in the presence of a person authorised by the Minister.

            (3)        The Minister may from time to time direct that any weighing or measuring appliance shall be tested or examined in such manner upon such occasions or at such intervals and by such means as may be specified in the direction.

            (4)        If any measuring or weighing appliance shall upon any such test or examination as is mentioned in sub-clause (3) be found to be false or unjust the same shall, if the Minister so determines after considering any representations in writing made by the Company, be deemed to have existed in that condition during the period since the last occasion upon which the same was tested or examined pursuant to sub-clause (3) and royalty payable under this Agreement for that period shall be adjusted accordingly.

            (5)        For the purpose of measuring natural gas won and saved from the Scheduled Lands the value of the natural gas shall be calculated at an absolute pressure of one atmosphere and at a temperature of 60°F.

 

   21.    Notwithstanding that the Minister and the Company cannot agree on the fair market value and the dispute is referred to a sole expert under the provisions of clause 17(c) the Company is liable to pay in accordance with Clause 22 royalty calculated on the basis of the market value of the crude which the Minister considers to be the correct market value, but in the event that a lesser market value is determined by the sole expert so appointed the amount of any excess royalty paid by the Company shall be set off against the liability of the Company to make future payments of royalty under this Agreement or, if no such liability can arise or arises, shall be paid to the Company.

 

   22.    (1)        Royalty under this Agreement in respect of a royalty period is payable not later than two months after the end of the royalty period.

            (2)        Where an amount of royalty determined in accordance with Clause 17 is not paid as provided by sub-clause (1), there is payable to the Government by the Company an additional amount calculated at the rate of 2 per centum per month, or part of a month, upon the amount of royalty from time to time remaining unpaid, to be computed from time to time with effect from the time when the royalty became payable until it is paid.

 

   23.    (1)        The Government shall have the right from time to time to appoint a qualified auditor to audit for the purposes of Government revenues, the books and accounts of the Company in respect of any year.

            (2)        For the purposes of any such audit the Company shall make available to the auditor all such books, records, accounts and other documents and information as may be reasonably required from the Company by him.

            (3)        At any time at which the Company is more than one company the reference in sub-clause (1) or (2) to “the company” is a reference to each one of those companies and accordingly, the liability under either of those sub-clauses is a several liability.

 

   24.    Any person or persons authorised by the Minister shall be entitled at all reasonable times to enter into and upon any of the Company’s installations or equipment used or to be used in connection with exploring for or getting petroleum in the Scheduled Lands, to execute any works or to provide and install any equipment which the Minister may be entitled to execute or provide and install in accordance with the provisions thereof.

 

   25.    The Company shall carry out operations under this Agreement in such manner as to ensure that there will be no unjustifiable interference with navigation, fishing or the conservation of the living resources of the sea and shall take such steps in regard to the state of the Scheduled Lands as the Minister may reasonably direct to ensure that after vacation thereof or any part thereof by the Company there will be no interference.

 

   26.    The Company shall not commence to construct or place any installations in the Scheduled Lands until plans and specifications of such installations and such other particulars thereof as may be required by the Minister have been submitted to him and the Minister has given his approval thereof in writing, which approval may be given on such terms and conditions as the Minister thinks fit including a direction that permanent means for giving warning of their presence must be maintained and that any installation which is abandoned or disused may be entirely removed.

 

   27.    (1)        No well shall drilled-

(a)        without the approval of the Minister which approval may be given on such terms and conditions as the Minister thinks fit: or

(b)        so as to deviate at any point out of the Scheduled Lands.

            (2)        The Company shall notify the Minister of the proposed site of a well and, if the Minister gives his approval under sub-clause (1), the well shall be described by a number (which shall be notified to the Minister) in the records, maps and plans which the Company is required to keep under this Agreement and any change in that number shall, likewise, be notified to the Minister.

            (3)        Where work at a well has been discontinued for more than six months, the well shall not be recommenced (except for the purpose of cleaning out operations in a producing well) unless seven days notice of the intended recommencement is given to the Minister.

 

   28.    (1)        The Company shall not abandon any well without the approval of the Minister which approval may be given subject to such terms and conditions as the Minister thinks fit.

            (2)        The Minister shall not withhold consent under sub-clause (1) in the case of a well which is or has become unproductive.

            (3)        Every well which the Company intends to abandon shall be securely plugged by the Company in order to prevent entry and exit of water in and from any portion of the strata bored through, unless the Minister otherwise determines.

            (4)        The Minister may on any occasion require that no well shall be plugged except in the presence of a person authorised by him.

 

   29.    (1)        The Company shall maintain all apparatus and appliances and all wells in the Scheduled Lands which have not been abandoned under this Agreement in good repair and condition and shall execute all operations in or connection with the Schedule Lands in proper and workmanlike manner in accordance with methods and practices customarily used in good oil-field practice and, without prejudice to the generality of the foregoing, the Company shall take all steps practicable in order-

(a)        to control the flow and to prevent the escape or waste of petroleum discovered in or obtained from the Scheduled Lands;

(b)        to conserve the Scheduled lands for productive operations;

(c)        to prevent damage to adjoining petroleum bearing strata;

(d)        to prevent the fortuitous entrance of water through wells to petroleum bearing strata; and

(e)        to prevent the escape of petroleum into any waters in or in the vicinity of the Scheduled Lands.

            (2)        The Company shall comply with any instructions from time to time given by the Minister in writing relating to any of the matters referred to in paragraphs (a) to (c) of sub-clause (1) but if the Company objects to any such instruction on the ground that it is unreasonable a dispute shall be deemed to exist between the Government and the Company for the purposes of Clause 57.

            (3)        Any event causing escape or waste of petroleum damage to petroleum bearing strata or entrance of water through wells to petroleum bearing strata (except for purposes of secondary recovery) shall be reported to the Minister forthwith.

            (4)        Notwithstanding that a dispute so exists, the Company shall comply with any such instruction unless it is otherwise determined on arbitration or the Minister alters, withdraws or suspends the instruction pending arbitration or otherwise.

            (5)        The Company shall not-

(a)        flare any gas from the Scheduled Lands; or

(b)        use gas for the purpose of creating or increasing the pressure by means of which petroleum is obtained from those lands,

except with the consent in writing of the Minister and in accordance with the conditions, if any, of the consent.

 

            (6)        Before deciding to withhold consent or to grant it subject to conditions in pursuance of sub-clause (5) the Minister shall give the Company an opportunity of making representations in writing to the Minister about the technical and financial factors which the Company considers are relevant in connection with the cases and shall consider any such representation then made to him by the Company.

            (7)        Consent in pursuance of sub-clause (6) shall not be required for any flaring which, in consequence of an event which the Company did not forsee in time to deal with it otherwise than by flaring, is necessary in order-

(a)        to remove or reduce the risk or injury to persons in the vicinity of the well in question; or

(b)        to maintain a flow of petroleum from that or any other well,

but when the Company does any flaring which is necessary as aforesaid the Company shall forthwith inform the Minister that the Company has done it and shall, in the case of flaring to maintain a flow of petroleum, stop the flaring on being directed by the Minister to do so.

 

   30.    The Company shall use generally accepted standards of good oil field operations, for confining petroleum obtained from the Scheduled Lands in tanks, gas holders, pipes, pipelines or other receptacles constructed for the purpose.

 

   31.    The Company shall comply with any instructions given from time to time by the Minister for securing the safety, health, welfare of person employed by the Company in or about the Scheduled Lands.

 

   32.    (1)        Where during the term of this Agreement-

(a)        the Minister is satisfied that this agreement and any other petroleum agreement are in force in respect of a common petroleum reservoir; and

(b)        he Minister considers that it is in the interest of Seychelles, in order to secure the maximum ultimate recovery of petroleum and to avoid unnecessary drilling, that the common petroleum reservoir should be worked and developed as a unit on a co-operative basis;

(c)        the Minister may, by notice, require the Company to cooperate with such persons as are specified in the notice (being all or any of the persons whose petroleum agreements are in force in respect of the common petroleum reservoir and in this Clause called “the other operators”) in the preparation of the scheme (in this Clause called a “development Scheme”) for the working and development of the common petroleum reservoir as a unit by the Company and the other operators on a cooperative basis.

            (2)        A notice under sub-clause (1) shall contain or refer to a description of the area or areas in respect of which the Minister requires a development scheme to be submitted and shall state the period within which the scheme is required to be submitted for approval by the Minister.

            (3)        If a development scheme is not so submitted or if the development scheme so submitted is not approved by the Minister the Minister may cause a development scheme to be prepared and given to the Company (which scheme shall be fair and equitable to the Company and the other operators) and the Company shall perform and observe the terms and conditions of the scheme.

            (4)        If the company notifies the Minister that it objects to a development scheme which the Minister causes under sub-clause (3) to be prepared a dispute shall be deemed to exist between the Government and the Company for the purpose of Clause 57.

            (5)        Notwithstanding that a dispute so exists, the Company shall perform and observe the terms of the development scheme unless it is otherwise determined by arbitration or the Minister alters, withdraws or suspends the scheme or the part of the scheme in dispute pending arbitration or otherwise.

 

   33.    (1)        When requested by the Minister to do so, the Company shall contribute to satisfaction of local petroleum needs of Seychelles, in so far as the Government is unable to satisfy such needs from petroleum to which the Government is entitled under the Petroleum Agreement.  If, at any time during the term of this Agreement, other producers of petroleum in Seychelles exist in addition to the Company, the obligation to contribute to satisfaction of local needs of Seychelles shall apply to each producer of petroleum in Seychelles including the Company, in proportion to their share to the total production of all producers of petroleum in Seychelles.

            (2)        The Company in no event shall be requested pursuant to sub-clause (1) to offer the Government more than twenty-five percent of the petroleum to which it is entitled under this Agreement.

            (3)        The price of petroleum offered to the Government pursuant to sub-clause (1) shall be determined pursuant to Clause 17.

            (4)        For purposes of this Clause, the term “local petroleum needs” shall include petroleum or petroleum products sold or supplied as fuel for ships and aircraft in Seychelles in the normal course of international trade and communications with Seychelles.

 

   34.    (1)        The Company shall keep full and accurate records in a form from time to time approved by the Minister, containing particulars of the following matters, namely-

(a)        the drilling, deepening, plugging or abandonment of wells;

(b)        the strata and subsoil through which wells are drilled.

(c)        the ceasing inserted in wells and any alteration to such casing;

(d)        any petroleum, water and other economic minerals encountered;

(e)        the areas in which any geological and geophysical work has been carried out including the nature of work and the details thereof,

(f)                such other matters related to the above as the Minister may from time to time reasonably require,

 

and shall also keep in Seychelles accurate geological maps and plans, geophysical records and interpretations relating to the Scheduled Lands.  Such maps, plans, records and interpretations and alla geological and geophysical reports made by or for the Company shall be available for inspection by the Minister or his duly authorised representatives, and the Company shall deliver copies of such maps, plans, records, interpretations and reports to the Minister whenever required.

 

(2)               The Company shall give the Minister-

(a)                within 15 days after the end of each month-

(i)         a summary of all geophysical work carried out;

(ii)        a summary of all drilling activity and results obtained;

(iii)             a list of maps, a list of reports and a list of other geological and geophysical data prepared by or for the Company; and

(iv)             notification of future exploration plans; and

 

(b)               within two months after the first day of January and the first day of July in each year, estimates of crude oil natural gas production, and exports for each of the 4 half year periods immediately following each of the said dates;

(c)                within four months after the end of each calendar year-

(i)         estimates of economically recoverable reserves of crude oil and natural gas at the end of that year;

(ii)        a record, in a form approved by the Minister, which describes the results of all exploration, development and other works carried out by the Company during that year in connection with searching for, boring for and obtaining petroleum;

(iii)       details of reports and documents to be provided as prescribed.

(d)               detailed reports of exploration and other wells, including lithostratigraphy, chronostratigraphy, petrophysical data, hydrocarbon zones and any such information within six months of completion of drilling, provided that such information as cannot reasonably be obtained within this period shall be submitted as soon as possible;

(e)                from time to time, such other plans and information as to the progress and results of the Company’s operations as the Minister may reasonably require; and

(f)                on relinquishment of any part of the Scheduled Lands, such maps, plans, reports, records interpretation and data, made or obtained by or for the Company, relating to exploration, development production and any operations, in the surrendered lands, as the Minister may require.

 

   35.    The Company shall, as far as is reasonably practicable, correctly label and keep for reference for a period of one calendar year characteristic samples of any fluids and or gas encountered in any well and samples of any pertroleum found in the Scheduled Lands, and for a period of three calendar years characteristic samples of the strata found in any well.  The Minister or his representative shall have access to such samples at all reasonable time and shall be entitled to require that representative specimens of any such samples be delivered to him and may retain any specimens so delivered.  Before disposing of samples subject to this Clause, the Company shall give six months notice of its intentions to dispose of the samples.

 

   36.    The Company shall, at all times during the term of this Agreement, keep in Seychelles full and correct accounts (in a form from time to time approved by the Minister) which shall contain accurate entries of-

(a)                the gross quantity of crude oil and natural gas won and saved from the Scheduled Lands;

(b)               the grades and gravity of the crude oil produced and the composition of natural gas produced;

(c)                the quantities sold of-

(ii)               natural gas;

(iii)             casinghead petroleum spirit;

(iv)             each refined petroleum product, including liquefied petroleum gases;

(v)               sulphur, in any form, or any other minerals, in any form, or any other gases, liquids or solids,

 

together with the names of the purchasers, the quantity purchased and the price paid by each purchaser;

 

(d)               the quantity of-

(i)         crude oil;

(ii)        natural gas;

(iii)             casinghead petroleum spitit;

(iv)             each refined petroleum product, including liquefied petroleum gases;

(v)               water and other liquids or gases, injected into the formation;

 

(e)                the quantity of-

(i)         crude oil;

(ii)        natural gas;

(iii)             casinghead petroleum spirit;

(iv)             each refined petroleum products, including liquefied petroleum gases, consumed for drilling and other production operations (other than quantities reported under paragraph (d) of this Clause), and consumed in pumping to field storage and refineries in Seychelles;

(f)                the quantity of crude oil refined in Seychelles;

(g)                the quantity of natural gas treated in Seychelles for removal of casinghead petroleum spirit or other liquids and liquidified petroleum gases and the quantity of-

(i)         casinghead petroleum spirit;

(ii)        butane;

(iii)             propane;

(iv)             any other liquid or gases or any solids’

obtained from it;

 

(h)               the quantity of natural gas flared; and

(i)                 such further information as the Minister may reasonably require from time to time.

 

   37.    (1)        The Company shall within 2 calendar months of the date of execution give to the Minister copies of all conveyances, leases assignments, agreements and deeds relating to the Scheduled Lands or any interest therein and to which the Company is a party or under which the Company either directly or indirectly obtains any benefit or incurs any liability.

            (2)        At any time at which the company is more than one company, the reference in sub-clause (1) to “the Company” is a reference to each of those companies and accordingly liability under that sub-clause is a several liability.

 

   38.    (1)        The Company shall keep the Minister currently advised of all major developments regarding the operations under this Agreement, including, but not limited to, information in respect of the drilling, deepening, workover, repair, plugging, abandonment or completion of wells.

            (2)        All data, well logs, maps, magnetic tapes, core samples and other geological and geophysical information obtained by it as a result of its activities under this Agreement and all geological, technical, financial, and economic reports, studies and analyses prepared by or for the Company relating to the Scheduled Lands shall be the property of the Government, however the Company

shall be entitled to retain copies of reports, maps, tapes, logs and portions of samples for its own use.  The Company shall deliver to the Minister within a reasonable time after they have become available copies of the above.  Sepia copie shall be supplied by the Company whenever requested.

(3)               The maps, plans, reports, tapes samples, studies, records, interpretations and data which the Company is required to deliver to the Minister under this Agreement shall be supplied at the expense of the Company and subject to this Clause, shall be treated as confidential by the Company and the Government, except as otherwise agreed.  The Government shall be entitled:

(a)                at any time to make use of any information received from the Company for the purpose of preparing and publishing aggregated returns and general reports on the extent of operations under this Agreement;

(b)               at any time, to make use of topographical survey information, including submarine topography, for any purpose whatever;

(c)                at any time to make use of information received from the Company for the purpose of any arbitration or litigation between the parties;

(d)               at any time, to make use of information regarding economic minerals other than petroleum;

(e)                to release well records including lithologies, electric logs, composite well logs, sample and core description, biostratigraphic reports, petrologic reports, geochemical reports, test reports, geophysical data including seimic profiles acquisition and processing reports, tapes, and display, gravity and magnetic data reports, after five years from the date when the information has been acquired by the Company;

(f)                upon the surrending of any part of the Scheduled Lands to release well records and geophysical data as referred under (e) which are related to the surrendered parts of Scheduled Lands; and

(g)                to use any maps, plan, reports, records, interpretation and data relating to any part of the Scheduled Lands which has been surrendered, upon the surrendering thereof or five years after acquisition of such data, which ever is earlier, for the purpose of generating regional presentation.

 

            (4)        The Company shall have the right to use the materials set out in sub-clause (2) for any purpose in connection with the Company’s operations under this Agreement and to disclose the information contained in such materials to outside consultants engaged in connection with the Company’s operations hereunder, to a bank or financial institution from whom the Company may be seeking to obtain financing or with the approval of the Minister, to any third party who has a bona fide interest in acquiring by purchase, exchange or otherwise all or a portion of the Company’s rights and interest in this Agreement. The Company shall inform the Government of the disclosure or disposal of any rights or interest pursuant to this provision.

 

   39.    (1)        The Minister or his duly authorised representatives may, at all reasonable times, enter into and upon any installations erected by the Company on or over any part of the Scheduled Lands for the following purposes, namely-

(a)        to examine the wells, plants, equipment, buildings and other things made or done by the Company under this Agreement and the state of repair and conditions of such thing;

(b)        to inspect and check the accuracy of the weighing or measuring appliances, weights, measurements, records, maps and plans which the Company is required to keep or make under this Agreement; and

(c)        to inspect the samples of strata, petroleum or water which the Company is required to keep under the Agreement.

            (2)        The Minister or duly authorised representative may at all reasonable times inspect and make abstracts or copies of any records, maps, plans, or accounts which the Company is required to keep in Seychelles or make under this Agreement.

 

   40.    (1)        The Company shall at all times keep the Government effectively indemnified against all proceedings, costs, charges, claims and demands whatsoever which may be made or brought against the Government by any 3rd person in relation to or in connection with this Agreement or any matter or thing done or purporting to be done in pursuance thereof.

            (2)        The Company shall, if required to do so by the Minister, take out and maintain such form of contract of insurance as the Minister may approve against any liability which it may incur under sub-clause (1).

 

   41.    (1)        No statement shall be made by or with the consent of the Company claiming or suggesting, whether expressly or by implication, that any Government Division or any person or body acting on behalf of the Government has or have formed or expressed an opinion that the Scheduled Lands are from their geological formation or otherwise likely to contain petroleum.

            (2)        Sub-clause (1) or a statement to the effect of that sub-clause shall not be included in or endorsed on may prospectus, statement in lieu of prospectus, notice, circular, advertisement or other invitation issued by or with the consent of the Company debentures of a company or a company proposed to be brought into existence.

 

   42.    The Company shall report to the Minister particulars of any fresh issues of capital which may be made by it from time to time and any alteration which may be made in the memorandum or articles of association or in the constitution of the Company.

 

   43.    (1)        The Company shall not assign, transfer or otherwise part with the rights or privileges hereby granted or any part thereof without the consent of the Minister first having been obtained, which consent may be given on such terms and conditions as the Minister thinks fit.

 

            (2)        The Minister shall not withhold his consent under sub-clause (1) or impose any terms or condition of his consent where-

(a)        the assignment, transfer or parting concerned is to a second company associated with the Company or to another party to this agreement; and

(b)        the Minister is satisfied that the assignment, transfer or parting will not adversely affect the performance of this Agreement.

 

            (3)        For the purposes of this Clause a second company is associated with the Company if that second company is an affiliate of the Company, or the Company is an affiliate of that second company, and for the purpose of determining whether or not in any case there is such an association-

“affiliate” means, as to the Company:

(a)        a corporation of which the share capital conferring a majority of votes at stockholder’s meetings of such corporation is owned directly or indirectly by such Company.

(b)        a corporation which owns directly or indirectly share capital of the Company conferring a majority of votes at stockholders’ meetings of such Company; or

(c)        a corporation of which the share capital conferring a majority of votes at stockholder’s meetings of such corporation is owned directly or indirectly by a corporation which also owns share capital conferring a majority of votes at stockholder’s meetings of such Company.

 

            (4)        Where a disagreement arises between the Minister and the Company as to whether or not a second company is associated with the Company, a dispute shall be deemed to exist between the Government and the Company for purposes of Clause 57.

 

            (5)        At any time at which the Company is more than one company the reference in the other provisions of this Clause to “the Company” is a reference to each one of the companies.

 

   44.    If the Company at any time fails to comply with any of the obligations which must be complied with by the Company under clause 25, 26, 27, 28, 29, 30, 53 or 54 the Government may, after giving to the Company reasonable notice, do any of the things which in the opinion of the Government may be necessary to ensure compliance with such obligations and to recover the costs and expenses of so doing from the Company.

 

   45.    (1)        The Company shall, to the extent practicable employ nationals of Seychelles for all types of work in the conduct of its operations.

            Subject to the law in force from time to time relating to entry into Seychelles, to the extent that the local supply of manpower with the necessary qualifications may be inadequate, the Company shall be permitted to bring skilled workers and experts (including their spouses and dependent children) into Seychelles for the purpose of petroleum operations.

            (2)        The Company shall use reasonable efforts to train nationals of Seychelles for all types of work with respect to its petroleum operation including technical, administrative, executive and management positions.  Towards this end, the Company shall undertake a full programme of on the job training, upon the approval by the Minister, after a commercial discovery takes place.

            (3)        The Company shall, to the greatest extent possible, engage local firms in the Seychelles (including companies incorporated in Seychelles) to carry out any works for, or supply materials to, the Company, but nothing in this sub-clause shall be taken as requiring the Company to engage local firms at an uneconomic rate or to engage local firms which are not competitive with non-local firms in terms of standards of workmanship.

 

   46.    (1)        The Company shall have the right to use natural gas associated with crude oil produced for oil field operations, including pressure maintenance in the oil fields covered by the Scheduled Lands.

            (2)        Subject to sub-clauses (1) and (4), the Government shall be entitled to take at the downstream flange of the separator on the production platform or, failing the existence of such a separator, at a point of delivery mutually agreed upon at the collecting and inlet system, and utilize without any payment therefor to the Company any associated natural gas which is in excess of the quantity of natural gas required for petroleum operations.  The costs and risks of taking and utilizing such associated natural gas by the Government hereunder will be borne solely by the Government.

            (3)        Associated and/or non-associated natural gas produced from the Scheduled Lands, except in the case of short-term flaring necessary for testing or other operational reasons, may be flared only upon the prior approval of the Minister.

            (4)        If natural gas, associated or non-associated, is discovered in commercial quantities, the Company may within a period of three years of such longer period as the Minister allows, elect whether or not to develop or exploit such natural gas discovery.  If the company decides to develop or exploit the natural gas deposit, the Government and the Company shall endeavour in good faith to reach agreement on the terms and conditions governing the development and/or exploitation.

 

   47.    The Company shall, before commencing any operations in the Schedule Lands, furnish to the Minister the name and address of the manager resident in Seychelles under whose supervision such operations are to be carried on.

 

   48.    (1)        The Company may, during the exploration phase, at the end of the fifth anniversary or on subsequent anniversaries of the term of this agreement determine this Agreement by not less than two months notice given to the Minister.

            (2)        The Company may, during the development phase, determine this Agreement on not less than twelve months notice given to the Minister.

 

   49.    (1)        Where the Company-

(a)        has failed to use the Schedule Lands bona fide for the purposes of this Agreement;

(b)        has failed to comply with a term or condition of this Agreement or with a direction or instruction given under this Agreement with which it is required to comply;

(c)        has failed to pay any amount payable by the Company within a period of one month after the day on which the amount became payable;

(d)        has failed to comply with any unit development scheme prepared in accordance with Clause 32;

(e)        has failed to commence commercial production within five years of the commencement of the development phase; or

(f)        has failed to comply with any of the terms or conditions subject to which the Minister gave his consent under Clause 43,

 

the Minister may, on that ground by notice to the Company, determine this Agreement.

            (2)        The Minister shall not, under sub-clause (1), determine this Agreement on the ground of any failure referred to in that sub-clause if the company claims that there has not been such a failure, unless-

(a)        the Company withdraws its claims; or

(b)        on arbitration it is determined that there has been such a failure.

            (3)        The Minister shall not, under sub-clause (1), determine this Agreement on the ground of any failure referred to in that sub-clause unless-

(a)        the Minister has, by notice to the Company, given not less than one month’s notice of the intention to determine this Agreement on that ground;

(b)        The Minister has, in the notice specified a date on or before which the Company may, by notice to the Minister, submit any matter which it wishes the Minister to consider; and

(c)        the Minister has taken into account-

(i)         any action taken by the Company to remove that ground or to prevent the occurrence of similar grounds; and

(ii)        any matters so submitted by the Company before the specified date.

            (4)        Where the Minister gives a notice under sub-clause (1) to the Company and the Company then claims that there has not been such failure as is referred to in that notice, Minister may, if either of the requirements of sub-clause (2)(a) or (b) have effect, determine this Agreement without giving a further notice under sub-clause (3).

            (5)        The Minister may by order determine this Agreement if an order is made or a resolution is passed winding up the affairs of the Company unless-

(a)        the winding up is for the purpose of amalgamation or reconstruction; and

(b)        the Minister has been notified of the amalgamation or reconstruction.

            (6)        The Minister may by order determine this Agreement if a receiver is appointed of the assets of the Company.

            (7)        At any time where the Company is more than one company, the Minister shall not under sub-clause (5) or (6) determine this Agreement because of the passing by one of those companies of a winding-up resolution or, as the case may be, because of the appointment of a receiver of the assets of one of those companies, unless satisfied that the remaining companies are unable to perform the obligations of the Company under this Agreement.

            (8)        At any time when the Company is more than one company, the reference in sub-clause (1) to (4) to “the Company” is a reference to those companies jointly.

 

   50.    (1)        On the determination of this Agreement under any of the provisions hereto, this Agreement and all the respective rights and obligations of the parties under this Agreement shall altogether cease to have effect: provided that such determination shall be subject to and without prejudice to any rights and obligations of the parties respectively expressed to arise under this Agreement on the determination thereof or any liability of either party arising out of an earlier failure to comply with any obligation which must be complied with by such party.

            (2)        Where any part of the Scheduled Lands are surrendered under this Agreement sub-clause (1) shall apply in relation to that part as if this Agreement has been determined but without prejudice to the re-inclusion under this Agreement in the Scheduled Lands of the part so surrendered.

 

   51.    (1)        Subject to the occupation rights of the Company (if any) under another petroleum agreement, at the end of the term of this Agreement or any earlier determination of this Agreement the Company shall if requested so to do by the Government deliver up to the Government, at a price not exceeding the written down value for tax purposes, any plant, pipeline, pumps, machinery and other assets of a fixed or permanent nature constructed, put up or built and used or employed by the Company in or on the Scheduled Lands and which are either at that time necessary for the continued production of any petroleum filed therein.

            (2)        The Company shall, if so requested by the Government, also sell to the Government at that time (at a price which, if agreement fails, shall be fixed by arbitration) any movable assets owned and used or employed by the Company in or on the Scheduled Lands which are then necessary for the continued production of any petroleum field therein and which the Government may wish to purchase:

 

Provided that-

(i)         the following provisions of this Clause shall not apply to movable assets which are still required by the Company for use or employment in respect of land held under any other petroleum agreement nor to assets of a fixed or permanent nature which are still required by the Company for the operations in Seychelles as aforesaid so long as such assets are so required;

(ii)        the Government shall give notice of any purchase it wishes to make hereunder at least six calendar months before the end of the term of this Agreement or, if this Agreement is determined before the end of that term within three calendar months following such determination.

            (3)        The Company shall not within five years before the end of the term of this Agreement remove from the Schedule Lands or sell any assets of a fixed or permanent nature which might be deliverable to the Government under this clause, without the consent of the Minister.

 

   52.    Subject to clause 51, the Company may from time to time remove and sell or otherwise dispose of any assets in or on the Scheduled Lands which are no longer required by the Company for the purpose of its operations under this Agreement, and pending such sale or other disposal may deal with such assets as the Company thinks fit.

 

   53.    Within two months after the end of the term of this Agreement or any earlier determination of this Agreement, the Company shall deliver up to the Government all productive wells made by the Company in good repair and condition and fit for further working (unless ordered by the Minister to plug them as provided in Clause 54 and except such wells as shall have been previously abandoned with the consent of the Minister).

 

   54.    Within two months after the end of the term of this Agreement or at any earlier determination of this Agreement, the Company shall plug all wells as provided in clause 28 if required so to do by the Minister.

 

   55.    Whenever a declaration is in force under section 3 or 4 of the Preservation of Public Security Act (Cap. 176), the following provisions shall apply, namely-

(a)        the Government shall hold the first right to purchase all crude oil obtained by the Company from the Scheduled Lands under this Agreement and all the products of that crude oil;

(b)        the Company shall use its best endeavour to increase as far as reasonably possible with facilities that then exist, the supply of crude oil or products of that crude oil to the extent required by the Government;

(c)        with all reasonable speed, the Company shall endeavour to deliver all crude oil or products of that crude oil which are purchased by the Government under this Clause in the quantities at the time and in the manner required by the Government at a convenient place of shipment or a place of storage in Seychelles to be determined by the Minister (whether belonging to the Government or otherwise).  If a vessel employed to carry any crude oil or products of such crude oil on behalf of the Government is detained on demurrage at the port of loading, then the Company shall pay the amount owing for demurrage according to the terms of the charter party or the rate of loading previously agreed unless the delay is due to causes outside the control of the Company;

(d)        the price to be paid for all crude oil or products thereof which are purchased by the Government shall be-

(i)         separately agreed by the parties; or

(ii)        in default of agreement, a fair price at the places and on the dates of delivery to be settled by arbitration.  To assist in arriving at a fair price at the places and on the dates of delivery, the Company shall give particulars to the Government and the arbitrators, if so required, in respect of the quantities, descriptions and prices of crude oil or products of that crude oil previously sol to other customers and of charters or contracts entered into for carriage.  The Company shall also show to the Government and the arbitrators original or authenticated copies of contracts or charter parties entered into for the sale or carriage of such crude oil or products.  The foregoing information shall be treated as confidential; and

(e)                the Government shall also hold the right to take control of any plant or premises of the Company in Seychelles and if this happens the Company shall conform to and obey all directions issued by the Minister or on his behalf.  Reasonable compensation shall be paid to the Company for any loss or damage proved to have been incurred by the company by reason of the exercise by the Government of the powers given by this paragraph of this Clause.

 

   56.    (1)        Failure on the part of the Company to fulfil any of the terms and conditions of this agreement shall not be treated as breach of this Agreement in so far as the failure arises from force majeure and if, as a result of force majeure, the fulfillment by the period of the delay shall be added to the period so fixed or allowed.

            (2)        In this clause the expression “force mejeure” means war, insurrection, riot, civil commotion or an exceptional, inevitable and irresistible natural phenomenon.

 

   57.    (1)        Where the Government or any authority of the Government and the Company fail to settle a dispute touching on or concerning the interpretation or performance of this Agreement, the Government and the Company hereby consent to submit the dispute for arbitration in accordance with the rules of the International Chamber of Commerce before a board of one, or more than one (but not being an even number), arbitrator appointed in accordance wit the said rules.

            (2)        Any reference in this Agreement to the effect that a matter constitutes a dispute under this Clause shall not be construed as in any way derogating from the generality of sub-clause (1).

            (3)        Any award rendered pursuant to sub-clause (1) shall be binding upon the parties submitting the dispute to such arbitration.

            (4)        Judgement upon the award so rendered may be entered in any court or other authority having jurisdiction or application may be made to the said court or other authority for a judicial acceptance of the award and an order of enforcement, as the case may be.

            (5)        At any time at which the Company is more than one company, the reference in the other provisions of this clause to “the Company” is reference to all those companies jointly, except in the case of a dispute which realtes to a provision of this Agreement in which a reference to “the Company” is stated to be a reference to each one of the companies.

 

   58.    This Agreement shall be governed by the laws of Seychelles but, in the event of a dispute contemplated by clause 57, the Arbitral Tribunal constituted for the purposes of the arbitration shall also apply the principles of law, equity and fairness generally recognized by the community of nations, including such of those which have been applied by international tribunals.

 

   59.    (1)        All notices and other communications to be given under the Agreement shall be given in writing and:

(a)        where the notice is to be given to the Minister or the Government may be sent by registered post to the Minister, Victoria, Mahe, Seychelles: or

(b)        where the notice is to be given to the Company may be delivered or sent by registered post;

(i)         to the registered office of the Company in Seychelles; or

(ii)        at any time where the Company is more than one company to the registered office of any such company in Seychelles; or

 

if there is no such registered office in Seychelles, to the address in Seychelles stipulated by the Company for the purposes of this Agreement.

            (2)        Any notice sent pursuant to this Clause by registered post shall be deemed to have been given on the date that is three days after the date of the posting of the notice.

 

   60.    The Minister may in writing authorise any person to exercise and perform any of his functions under this Agreement and anything done by the delegate in pursuance of the delegation shall have the same validity and effect as it would have if done by the Minister.

 

   61.    Nothing in this Agreement shall entitle the Company to exercise the rights, privileges and powers conferred upon it by this Agreement in a manner which would contravene any law of Seychelles.

 

   62.    The Government shall use its best endeavours to assist the Company to acquire rights over land in Seychelles where those rights are required by the Company for the purposes, or for purposes incidental to the purposes of, this Agreement.

 

   63.    For the purposes of making a return of Income under the Petroleum Income Tax (Cap 166), income accruing or expenditure incurred in a currency other than Seychelles rupees shall be converted into Seychelles rupees at the Central Bank of Seychelles exchange rate prevailing on the date of transaction.

 

   64.    The Agreement shall not be annulled, or modified in any respect except by the mutual consent, expressed in writing of the Government and the Company.

 

   65.    The Marginal notes are for convenience only and do not form part of this Agreement.

Notes:  Schedules to the Agreement will-

(1)               identify the land to which the Agreement relates;

(2)               set out the programmes to be carried out and the amount payable by the Company to the Government for failure to carry out any programme;

(3)               specify the terms of participation by the Government in a petroleum field;

(4)               provide the rent payable under the Agreement; and

(5)               state the bonuses payable by the Company to the Government.

 

_____________________________

SECOND SCHEDULE

(Regulation 5)

MODEL EXPLORATION LICENCE

 

GOVERNMENT OF THE REPUBLIC OF SEYCHELLES

PETROLEUM MINING ACT

 

LICENCE NO:  …………………………………………………………………………………………..

NAME, etc. OF LICENSEE …………………………………………………………………………

…………………………………………………………………………………………………………………..

 

   1       (1)        In this Licence, unless the context otherwise requires-

            “exploration area” means, subject to sub-clauses (3), (4) and

            (5), the area of land specified in the Schedule:

            “licensee” means the person or persons to whom this Licence is

            granted;

            “Minister” means the Minister responsible for petroleum mining.

 

            (2)        Any expression which is defined in the Petroleum Mining Act (Cap 167) shall, unless the context otherwise requires, have the same meaning when used in this License.

 

            (3)        A reference in this Licence to the exploration area does not include any area excluded from the exploration area by reason of the operation of section 8 of the Petroleum Mining Act (Cap. 167).

 

            (4)        The following islands within the exploration area are excluded from the exploration area, namely ………………………………………….

………………………………………………………………………………………………………………....

…………………………………………………………………………………………………………………..

 

            (5)        The exclusion of an island under sub-clause (4) includes the foreshore of the island and the surrounding sea to a depth of

………………………………………………………………………………………………………………….

 

   2.      In consideration of the payments as hereinafter provided and the performance and observance by the licensee of the terms and conditions of this Licence, the ……………….. hereby grants to the licensee the right to search, prospect and explore for petroleum in the exploration area.

 

   3.      Subject to the Petroleum Mining Act (Cap. 167), the licensee shall have and may exercise in the exploration area in accordance with this Licence the rights referred to in section 13(1) of that Act.

 

   4.      This Licence, unless sooner determined, shall be and continue in force for the term of two years next after ………………. 19.

 

   5.      (1)        Without prejudice to any obligation or liability imposed by or incurred under the terms and conditions hereof the licensee may at any time during the term of this Licence determine this Licence by giving to the Minister not less than six months’ notice in writing to that effect.

            (2)        If the licensee, not less than three months before the expiration of the Licence, applies in writing for an extension of this Licence ………………… may, in accordance with the Petroleum Mining Act (Cap. 167) grant an extension of this Licence in respect of the whole of the exploration area for the time being comprised in this Licence or any part thereof for a further term of one year on the same terms and conditions as set out in this Licence.

   Provided that the licensee shall pay such further consideration as may be required for the extension applied for by him.

 

   6.      (1)        The licensee shall pay to the Minister on the grant of this Licence the sum of ………………..

            (2)        The licensee shall not drill in the exploration area except in so far as it is necessary to do so for the purpose of obtaining geological information.

 

   7.      (1)        The licensee shall not commence or, after abandoning in the manner hereinafter provided, shall not recommence, the drilling of any well without the consent in writing of the Minister.

 

            (2)        The licensee shall not abandon any well without prior notification in writing to the Minister except as provided in sub-clauses (5) and (6).

            (3)        The licence shall comply with any conditions subject to which any consent under sub-clause (1) is given.

            (4)        If any condition under sub-clause (1) relates to the position or depths of the well or its direction or if any such condition relates to any casing, plugging or sealing of the well, the Minister may from time to time direct that the well and all records relating thereto shall be examined in such manner and upon such occasions or at such intervals and by such persons as may be specified by the Minister and the license shall pay to any such person or to the Minister such fees and expenses for such examination as the Minister may specify.

            (5)        Where the licensee’s right in any part of the exploration area determines by reason of the entry into force of a petroleum agreement between the Government and another person the licensee shall, within one month thereafter, plug any of the licensee’s wells in such part of the exploration area.

            (6)        All the licensee’s wells (other than wells to which subclause (5) applies) in the exploration area shall, unless the Minister otherwise determines, be plugged by the licensee not less than one month before the expiry or determination of the licensee’s right under the Licence.

            (7)        The plugging of any well shall be done in accordance with a specification approved by the Minister applicable to that well or to wells generally or to a class of wells to which that well belongs and shall be carried out in an efficient and workmanlike manner.

 

   8.      No well shall, except with the consent in writing of the Minister, be drilled or made so that any part thereof is less than 600 feet from any of the boundaries of the exploration area.

 

   9.      (1)        The licensee shall maintain all apparatus and appliance and all wells in the exploration area which have not been abandoned under this Licence in good repair ad condition and shall execute all operations in or in connection with the exploration area in proper and workmanlike manner in accordance with methods and practices customarily used in good oilfield practice and, without prejudice to the generality of the foregoing, the licensee shall take all steps practicable in order-

(a)                to control  the flow and to prevent the escape or waste of petroleum discovered in the exploration area;

(b)               to conserve the exploration area for productive operations;

(c)                to prevent damage to petroleum bearing strata;

(d)               to prevent the fortuitous entrance of water through wells to petroleum bearing strata; and

(e)                to prevent the escape of petroleum into any waters in or in the vicinity of the exploration area.

            (2)        The licensee shall comply with any instructions from time to time given by the Minister in writing relating to any of the matters referred to in paragraph (a) to (c) of sub-clause (1).

            (3)        The licensee shall give notice to the Minister of any occurrence causing escape or waste of petroleum, damage to petroleum bearing strata or entrance of water through wells to petroleum bearing strata, within three days of occurrence.

 

   10.    The licensee shall carry out operations under this Licence in such manner as to ensure that there will be no unjustifiable interference with navigation, fishing or the conservation of the living resources of the sea and shall take such steps in regard to the state of the exploration area as the Minister may reasonably require to ensure that after vacation thereof or any part thereof by the licensee there will be no such interference.

 

   11.    The licensee shall comply with any instructions given from time to time by the Minister for securing the safety, health and welfare of persons employed by the licensee in or about the exploration area.

 

   12.    (1)        The licensee shall keep accurate records in a form from time to time approved by the Minister of the drilling, deepening, plugging or abandonment of all wells and of any alterations in the casing thereof.

            (2)        Such records shall contain particulars of the following matters-

(a)        the site of the number assigned to every well;

(b)        the subsoil and strata through which the well was drilled;

(c)        the casing inserted in any well and any alteration to such casing;

(d)        any petroleum, water, mines or workable seams of coal or other minerals encountered; and

(e)        such other matters as the Minister may from time to time direct.

            (3)        The licensee shall keep in Seychelles accurate geological and geophysical plans and maps relating to the exploration area and such other records in relation thereto as may be necessary to preserve all information which the licensee has about the exploration area.

            (4)        The licensee shall deliver copies of any records, plans and maps referred to in sub-clause (2) or (3) to the Minister as and when required.

 

   13.    (1)        The licensee shall furnish to the Minister every three months during which this Licence is in force a return I a form from time to time approved by the Minister of the progress of this operations in the exploration area.

            (2)        Such returns shall contain-

(a)        a statement of the areas in which any geological work, including surveys by any geophysical, topographic or chemical means, has been carried out;

(b)        the number assigned to each well, and in the case of any well the drilling of which was begun or the number of which was changed in that month, the co-ordinates of the site thereof;

(c)        a statement of the depth drilled in each well; and

(d)        a statement of any petroleum, water, mines or workable seams of coal or other minerals having economic value encountered in the course of the said operations.

            (3)        Within two months after the end of each calendar year in which this Licence is I force and within two months after the expiration or determination of this Licence, the licensee shall furnish to the Minister a return in a form from time to time approved by the Minister of the operations conducted by the licensee in the exploration area during that year or the period prior to such expiration or determination, as the case may be, together with a plan upon a scale approved by the Minister showing the situation of all wells and all works executed by him in connection with searching for petroleum.

            (4)        The licensee shall furnish to the Minister such other information including information in the form of maps and plans, as to the progress of his operations in the exploration area as the Minister may from time to time require.

 

   14.    When petroleum or petroleum bearing strata is discovered in the exploration area the licensee shall, without delay, notify the discovery to the Minister giving in the notification particulars of the location, the nature and the estimated size of the discovery.

 

   15.    (1)        As far as reasonably practicable the licensee shall correctly label and preserve for reference for a period of twelve months samples of the sea bed ad of the strata encountered in any of the licensee’s well and samples of any petroleum or water discovered in any of the licensee’s wells in the exploration area.

            (2)        The Minister or any person authorized by him shall be entitled to require that part of any such sample be delivered to him And to retain any sample or part thereof so delivered, and shall be entitled to inspect and analyse any samples kept by the licensee.

 

   16.    (1)        All records, returns, plans, maps and information which the licensee is or may be from time to time required to furnish under the provisions of this License shall be supplied at the expense of the licensee and shall not (except with the consent in writing of the licensee which shall not be unreasonably withheld) be disclosed during the currency of this Licence or for six months thereafter to any person not in the service or employment of the Government.

            (2)        The Minister shall nevertheless be entitled at any time to make use of any information received from the licensee for the purpose of preparing and publishing such returns and reports as may be required.

 

   17.    Any person authorized by the Minister may at all reasonable times inspect and make abstracts or copies of any records, returns, plans or maps which the licensee is required to keep or make in accordance with the provisions of this Licence.

 

   18.    Any person authorized by the Minister shall be entitled at all reasonable times to enter into and upon any of the licensee’s installations and equipment used or to be used in connection with searching for petroleum in the exploration area for the purpose of-

(a)        examining the installations, wells, plant, appliances and works made or executed by the licensee in pursuance of this Licence and the state of repair and condition thereof; and

(b)        executing any works or providing and installing any equipment which the Minister may be entitled to execute or provide and install in accordance with the provisions hereof.

 

   19.    If the licensee shall at any time fail to perform the obligations arising under the terms and conditions of Clause 7, 9 or 11 the Minister shall be entitled, after giving to the licensee reasonable notice in writing of his intention to execute any works and to provide and install any equipment which in the opinion of the Minister may be necessary to secure the performance of the said obligations or any of them and to recover the coasts and expenses from the licensee.

 

   20.    (1)        The licensee shall at all times keep the Government effectually indemnified against al proceedings, costs, charges, claims and demands whatsoever which may be made or brought against the Government by any third party in relation to or in connection wit this Licence or any matter or thing done or purporting to be done in pursuance thereof.

            (2)        The licensee shall, if required to do so by the Minister, take out and maintain such form of contract of insurance as the Minister may approve against any liability which the licensee may incur under sub-clause (1).

 

   21.    The licensee shall not assign or part with any of the rights granted by this Licence in relation to the whole or any part of the exploration area or grant any sub-licence in respect of any such rights.

 

   22.    (1)        Where the licensee-

(a)        has failed to use the exploration area bona fide for the purposes of this Licence;

(b)        has failed to comply with a term or condition of this Licence o with a direction or instruction given under the Licence with which the licensee is required to comply; or

(c)        has failed to pay any amount payable by the licensee within one month after the day on which the amount become payable,

 

the Minister may, on that ground by notice to the licensee, determine this Licence.

            (2)        The Minister may by order determine this Licence if, where the licensee is a company, an order is made or a resolution is passed winding up the affairs of the Licensee unless-

(a)                the winding up is for the purpose of amalgamation or reconstruction; and

(b)               the Minister has been notified of the amalgamation or reconstruction.

(3)        The Minister may by order determine this Licence if, where the licensee is a company, a receiver is appointed of the assets of the licensee.

(4)               The Minister may by order determine this Licence if, where the licensee is an individual, he is declared bankrupt or makes an arrangement with his creditors.

 

   23.    (1)        If at any time any dispute, difference or question shall arise between the Government and the Licensee as to any matter arising under or any virtue of this Licence or as to their respective rights and liabilities in respect thereof then the same shall, except where it is expressly provided by this Licence that the matter or thing to which the same relates is to be determined, decided, approved or consented to by the Minister, be referred to arbitration as provided in this Clause.

            (2)        The parties shall seek to agree upon the joint appointment of a single arbitrator.

            (3)        Failing such agreement within three calendar months of the time that the dispute, difference or question arose, each party shall have the right to appoint one arbitrator, and these two arbitrators shall jointly appoint a third arbitrator who shall be the chairman.

            (4)        If the first two arbitrators shall fail to agree within two calendar months of their appointment upon the appointment of a third arbitrator or if either party shall fail to appoint an arbitrator within one calendar month of the failure to agree on a single arbitrator then the appointment shall be referred to the competence of the …………… at the request of either party.

            (5)        Such arbitration shall be conducted in accordance with the laws and customs of Seychelles and the award of the arbitrator or arbitrators shall be final and binding upon both parties.

 

(6)               Each party shall pay for its own costs and shall contribute fifty per cent of the fees and expenses of the arbitrators.

 

   24.    (1)        All notices and other communications to be given or made under this Licence shall be given or made in writing, and-

(a)         where the notice is to be given to the Minister or the Government it may be sent by registered post to …………………..; or

(b)         where the notice is to be given to the licensee it may be delivered or sent by registered post to the registered office of the licensee in Seychelles or if the licensee has no such registered office, to the address in Seychelles stipulated by the licensee for the purposes of this licence.

            (2)        Any notice sent pursuant to this clause by registered post shall be deemed to have been given on the date that is three days after the date of the posting of the notice.

 

   25.    The Minister may in writing authorize any person to exercise and perform any of his functions under this Licence and anything done by the delegate in pursuance of the delegation shall have the same validity and effect as it would have if done by the Minister.

 

   26.    Nothing in this Licence shall entitle the licensee to exercise the rights, privileges and powers conferred upon the licensee by this Licence in a manner which would contravene any law of Seychelles.

 

   27.    The marginal notes are for convenience only and do not form part of this Licence.

 

NOTE: Schedule will identify the area of land to which this Licence relates.

 

________________

Petroleum Mining (Petroleum Drilling) Regulations

(12th March, 1980)

 

ARRANGEMENT OF REGULATIONS

1.               Citation

2.               Interpretation

3.               Application

4.               Exemption

5.               Adherence and keeping copy of Regulations

6.               General provisions with respect of drilling

7.               Notice of firms to be given to Minister

8.               Placing of constractions

9.               Compliance of drilling rig

10.           Construction of drilling rig

11.           Maintenance of drilling rig

12.           Division of drilling rig into watertight partitioning

13.           Maintenance position of drilling rigs

14.           Waste collectors

15.           Safety devices

16.           Life saving equipment

17.           Life jackets

18.           Living quarters etc.

19.           Safety devices

20.           Identification

21.           Lights

22.           Signals

23.           Transfers

24.           Helicopters

25.           Drilling equipment

26.           Miscellaneous requirements concerning machinery

27.           Testing equipment

28.           Generators and ventilation system

29.           Earthing of electrical systems

30.           Limit o currents

31.           Protection against water etc.

32.           Portable electrical equipment

33.           Electric light

34.           Emergency power

35.           Emergency battery system

36.           Fire zones

37.           Fire alarm system

38.           Fire fighting installations

39.           Explosive material

40.           Radioactive materials

41.           Telecommunication equipment

42.           Manning

43.           Avoidance of accidents

44.           Head protection, etc.

45.           Limitation on work

46.           Inspection

47.           Access

48.           Reporting accidents

49.           Waste

50.           Drilling programme

51.           Approval ect of drilling programme

52.           Moving, etc. of drilling rig

53.           Positioning of drilling rig

54.           Derricks

55.           Commencement of drilling

56.           Duties of off-going crew, etc.

57.           Care during loading

58.           Directional surveys

59.           Casing

60.           Blowout preventers

61.           Construction of blowout preventers

62.           Preventer and Kelly cock

63.           Testing

64.           Drilling mud

65.           Use of drilling mud, etc.

66.           Gas detectors, etc.

67.           Flow test

68.           Clerance of personnel and obstructions

69.           Acidizing operations

70.           Logs

71.           Securing wells

72.           Minister to be informed

73.           Divers

74.           Diving operations

75.           Diving operations at certain depths

76.           Regulation of diving operations

77.           Decompressions chamber

78.           Diving log

79.           Blowout

80.           Oil pollution

81.           Duty of concessionaires

82.           Relief well

83.           Drilling relief well

84.           Costs of investigation

85.           Offences

_______________

 

   1.      These Regulations may be cited as the Petroleum Mining (Petroleum Drilling) Regulations.

 

   2.      (1)        In these Regulations, unless the context otherwise requires-

“blowout” means uncontrolled escape of fluids from the well because of high pressure;

 

“blowing preventer” means the assembly which is mounted on the top of the casing strings with the object of preventing a blowout; distinction is made between the following preventer types-

 

“annular or bag-type preventer” which by means of a rubber packing element can close around the drill pipe or other equipment;

 

“ram-type preventer with pipe jaws” means of a preventer which by means of jaws can close around the drill pipe;

 

“ram-type preventer with shear jaws” means a preventer which on being closed can cut through the drill pipe or other equipment;

 

“casing” means steel tubing which is run in the borehole to protect it; distinction is made between the following types (mentioned in the order in which they are run)-

 

“drive casing or structural casing” means casing in a casing string run immediately after the start of drilling;

 

“conductor casing” means casing in a deeper string which serves to hold the first set of blowout preventers;

 

“intermediate casing” means casing run after the surface casing string but before the production casing string;

 

“production casing” means casing in the last string to be run which goes right up to the well;

 

“liner” means casing string which is run after the production casing string, and which is suspended in the production casing string and does not go up to the top of the well;

 

“concessionaire” means a licensee or a party to a petroleum agreement, and includes a person to whom rights under a petroleum agreement have been assigned;

 

“derrick floor” means the working surface below the derrick where work involving connecting and disconnecting drill pipes is undertaken;

 

“diverter” means the pipe system which in case of a blowout leads the fluids coming from the well away from the drilling rig;

 

“drilling” means that part of drilling operations which concerns the actual drilling of a hole;

 

“drilling mud” means the fluid, including additives, used in drilling wells;

 

“drilling operations” means all operations connected with the drilling of wells;

 

“drilling rig” means any mobile constructions, including a drill ship, with equipment and installations, from which wells can be drilled at sea;

 

“drilling site” means the delimited area within which the well location is selected;

 

“drilling superintendent” means the person on the drilling platform who is responsible for the drilling;

 

“formation flow test” means an operation ton induce the flow of formation fluids to the surface for the purpose of procuring reservoir fluid samples and determining reservoir flow characteristics;

 

“heave compensator” means the device which allows for the up and down movements of the drilling rig and ensures that the tension on the drill string is kept constant;

 

“hydraulic fracturing” means the production of fractures in a formation by means of pressure;

 

“log” means measurement of physical properties of rocks in the borehole by means of a non-destructive measurement technique;

 

“marine riser” means the steel pipe which connects a floating drilling rig with the well, and which during the drilling encompasses the drill string and conducts the drilling mud back to the drilling rig;

 

“well” means the borehole with accompanying casing string, cement, blowout preventers, and other equipment and material placed on or below the sea floor and firmly connected to the casing strings;

 

“wellhead” means that part of the well which is placed above or just at the sea floor;

 

“well location” means the exact geographic position of the well based on Qornoq Datum.

 

            (2)        Anything authorized under these Regulations to be done by the Minister (including the giving of any consent or approval) may be done by any person who is authorized generally or specially in that behalf in writing by the Minister and for the purpose of doing so that person shall be deemed to be the Minister.

            (3)        Where in these Regulations, reference is made to “regulations applicable”, such reference shall be construed as a reference to such regulations relating to the matter in question as may be in force in Seychelles from time to time, and in the absence of any such regulations such other regulations as the Minister may from time to time determine.

 

   3.      These Regulations apply to any person carrying on drilling operations for a concessionaire, cited personally or through independent contractors or sub-contractors, as they apply to a concessionaire carrying on those operations.

 

   4.      The Minister may, by instruction in writing, if he considers that the public interest would not be prejudiced, grant to any person exemption from complying with any requirement of these Regulations, unconditionally or subject to conditions specified in the instrument; and the Minister may, in like manner, revoke any such exemption.

 

   5.      (1)        In carrying out these Regulations a concessionaire shall at all times ensure that in providing any equipment, undertaking any operations or safety measures or doing any other thing he shall adhere to standards not less than currently accepted as good oil industry practice.

            (2)        A concessionaire shall keep on board drilling rigs and vessels engaged in drilling operations a copy of these Regulations (including amendments thereto), and provide reasonable access to these Regulations to all employees.

 

   6.      (1)        Drilling operations shall be undertaken in a safe manner and in accordance with the regulations in force at the time in question, and in such a manner that risks to persons engaged in the drilling operations are reduced to an absolute minimum.

            (2)        The work shall not to an unreasonable degree interfere with shipping, aviation and fishing, and particular care shall be taken to avoid risk of damage to underwater cables or other underwater installations; special care shall be taken to avoid damage to animal and plant life and precautions shall be taken to avoid pollution of the air, sea, seabed and its subsoil.

 

   7.      A concessionaire shall, in writing, keep the Minister informed of the names, addresses and nationalities of firms that, either directly or indirectly, undertake work in excess of SR.1,500,000 for the concessionaire in off-shore land, and shall give particulars of the nature and extent of the work.

 

   8.      (1)        No temporary or permanent constructions (including any types of drilling rig) shall be placed on or above the seabed or in its subsoil with a view to starting drilling operations, unless and until the necessary authority has been given by the Minister.

            (2)        A concessionaire shall keep the Minister informed in writing as to each move of a construction of a kind referred to in sub-regulation (1).

 

   9.      (1)        A drilling rig intended for use in off-shore land shall be of such design and so equipped as to comply with these Regulations.

            (2)        If a drilling rig is to be used as a drill ship and is not classified, the Minister may require that the drill ship be surveyed by a recognized classifying firm at the expenses of the concessionaire.

            (3)        A concessionaire shall, if requested, provide such information as has been used as a basis for assessing the suitability of the drilling rig for the intended task.

            (4)        Information submitted pursuant to sub-regulation (3) shall include an account of the system for maintaining position and the maneouvring and propulsion system.

            (5)        The Minister may require that the drilling rig with equipment and installations be inspected by qualified persons.

            (6)        Travel and accommodation costs in connexion with the inspection referred to in sub-regulation (5) shall be met by the concessionaire concerned.

            (7)        Government may require a concessionaire to supply a certificate of compliance with these Regulations in respect of any equipment used.

 

   10.    (1)        A drilling rid shall be constructed, built and equipped in such a manner that it is seaworthy and can withstand the various effects that can be expected from the environment, and in such a manner that drilling and related operations can be undertaken safely and efficiently.

            (2)        A drilling rig shall, at all times during drilling and during moves, be provided with such equipment as is required for the safe operation of the drilling rig, such as nautical equipment, emergency power supply, position-marking equipment, sound and light signals, life-saving equipment, fire-fighting equipment, first-aid equipment, telecommunications equipment and equipment for internal communications.

 

   11.    (1)        A concessionaire shall ensure that any drilling rig and equipment used are in proper working condition at all times.

            (2)        Damage to a drilling rig or its equipment and installations and repair of such damage shall immediately be reported to the Minister.

 

   12.    (1)        A drilling rig shall be divided into watertight main compartments by means of watertight partitions or in a similar manner, in assessing the degree of stability to be expected in cases where leakage has occurred, assumptions to be made about the extent of damage and assumptions to be made about whether one or more adjacent main compartments have been filled with water will depend upon the type of drilling rig that it is planned to use; the drilling rig shall, if in a damaged condition, have sufficient stability to be able to withstand the effect of winds and seas from any direction; when due account has been taken of sinking, list and trim, the resulting state of the drilling rig shall be such that there is adequate freeboard to the lowest point of any opening through which further entry of water can occur.

            (2)        A drilling rig shall be equipped with the necessary number of pumps for pumping out water and trimming.

 

   13.    (1)        The system for maintaining position shall be so constructed that a drilling rig can be kept in position under all normally occurring weather, current and wave conditions at the drilling site during the drilling period.

            (2)        The system for maintaining position and the manoeuvring and propulsion system shall be so constructed that a drilling rig can be moved off at short notice.

 

   14.    All parts of a drilling rig where leakage or spillage of oil or other harmful waste products can occur shall be provided with suitable waste collectors and disposed of in accordance with good oil industry practice as agreed with the Minister.

 

   15.    A drilling rig shall be provided with all necessary safety devices in order to prevent accidents, the standards being not less than those accepted under good oil industry practice.

 

   16.    (1)        A drilling rig shall be supplied with life jackets, life buoys, line-casting equipment, life raft and covered motor-driven or survival capsules of types approved by the Minister.

            (2)        Life saving equipment shall be inspected at such intervals as the manufacturers may recommend or, in the absence of such recommendation, as the Minister may determine.

            (3)        The necessary facilities shall be installed to ensure that life saving equipment can be brought into use quickly.

            (4)        Covered lifeboats and survival capsules on the drilling rig shall together be able to accommodate at least twice the maximum number of persons employed on the drilling rig; lifeboats and survival capsules shall be suitably distributed along the sides of the drilling rig.

            (5)        Equipment for lowering the lifeboats and survival capsules shall be of a type that can be operated from the lifeboat or survival capsule without external help, the lowering equipment being so designed and placed that the lifeboats and survival capsules can be launched under a list of up to 15 degrees to the opposite side.

            (6)        A drilling rig shall be equipped with approval inflatable life rafts of sufficient capacity to be able to accommodate twice the number of persons for whom there are bunks on the drilling rig; such rafts shall be suitably distributed along the sides of the deck of the drilling rig and shall be placed on board free of the railings and bulwarks in such a way that when they are released they can freely enter the water when there is a list of up to 15 degrees to the opposite side.

            (7)        At least two life-rafts shall be placed as close as possible to the helicopter deck and shall together have a capacity sufficient to take at least twice the number of persons that can be accommodated in the helicopter.

            (8)        A drilling rig shall be equipped with an emergency life-boat of an approved type with a motor; the boat shall be of a type that can be launched quickly, shall be easily manoeuvrable, and shall be designed to permit the rapid recovery of anyone who has fallen overboard.

 

            (9)        An emergency lifeboat shall at all times be ready for instant use and shall be served by a winch that allows rapid lowering and raising.

            (10)      An emergency lifeboat shall have a radio permanently installed in it to permit communication with the drilling rig during rescue operations.

            (11)      Proper means shall be available to ensure safe transfer of persons from the deck of the drilling rig to lifeboats and life rafts when these are in the water.

            (12)      Lifeboats, survival capsules, emergency lifeboats and life buoys shall have on them the name and port of registration of the drilling rig.

            (13)      Lifesaving equipment shall be equipped with reflecting material of approved type according to the regulations applicable.

 

   17.    (1)        The number of life jackets on a drilling rig shall be twice the maximum number of persons employed on the drilling rig.

            (2)        Life jackets shall be suitably distributed between the sleeping quarters and the rescue stations.

 

   18.    (1)        Living quarters on the drilling rig shall be separate from working areas.

            (2)        Living quarters shall be heat-and sound-insulated, shall have the necessary ventilation systems, and shall, in general, be arranged in accordance with the regulations applicable at the time in question concerning living quarters for ships’ crews.

            (3)        The ventilation system in the quarters referred to in sub-regulation (2) shall be so constructed as to prevent penetration of poisonous or noxious gases or dust through the system into the living quarters; and shall be equipped with main switches for immediate shutdown of the system in case of danger of gases or dust.

            (4)        The position of the sick bay on a drilling rig shall be such

that injured persons can be transported without difficulty by stretcher from dangerous places of work on the drilling rig to the sick bay and from the sick bay to the helicopter deck.

            (5)        Resuscitation equipment, first-aid equipment and other equipment as may be required in accordance with the regulations applicable at the time in equipment shall be adequate to provide first-aid treatment for every reasonably foreseeable type of injury or illness on board and during transport to a hospital on shore.

 

   19.    (1)        A drilling rig shall, in general, be equipped with all necessary safety devices for protection of persons on board.

            (2)        Walkways, stairways and working surface shall be equipped with non-slip surfaces and, when necessary, with toeboards and railings.

            (3)        Companionways and other means of access between the various parts of the rig shall be so constructed as to permit safe passage.

            (4)        Railings shall likewise be installed on rigs leading to or situated above open tanks, shafts, gutters and other installations which may be dangerous for the personnel, and shall be of sound contruction.

            (5)        The deck of a drilling rig shall be constructed in such a manner that water drains off easily.

 

   20.    (1)        A drilling rig shall be marked with the name and port of registration of the drilling rig and the name of the concessionaire.

            (2)        The marking shall be effected in such a manner as to render the rig readily identificable from both aircraft and vessels and the marking shall be readily visible in daylight and after dark, the letters and numbers begin at least 1m in height.

 

   21.    A drilling rig shall be equipped with one or more white lights placed so as to ensure that at least one light is visible on any side of the rig; the lights shall be placed not higher than 30 m or lower than 6 m above sea level, and shall be visible in dark nights with good visibility at least 10 nautical miles away; the lights shall be equipped with synchronized devices giving a signal corresponding to the Morse letter “U” at intervals of approximately 15 seconds; the lenses of the light shall be so constructed as to ensure that the light, in addition to being visible at the above mentioned distance is visible from any vessel in the vicinity of the drilling rig.

 

   22.    (1)        A drilling rig shall be equipped with sound and light signals in accordance with international practices; if the drilling rig is located within or near established shipping lanes, marker buouys shall be deployed with signals in conformance with international practices.

            (2)        For the protection of air traffic, a drilling rig shall be equipped with approved warning lights and all points on the drilling rig which may endanger helicopter service to and from the drilling platform shall be adequately marked.

            (3)        A drilling rig shall be equipped with one or more high-powered, synchronized devices which are to constructed and installed as to emit sound signals audible in all directions; the sound devices shall be placed not higher than 30 m or lower than 6 m above sea level and shall be audible at a distance of a least 2 nautical miles in calm weather; the sound signals shall be two short blasts and one long blast corresponding to the Morse letter “U” approximately every 30 seconds; the short blast shall last a minimum of 0.75 seconds, and the sound signal shall be in operation when the visibility is less than 2 nautical miles.

 

   23.    (1)        A drilling rig shall be designed, constructed and equipped in such a manner as to permit the safe transfer of persons and goods to and from the drilling rig when it is on location and when weather conditions in general permit safe transfer.

            (2)        A drilling rig shall be designated, constructed and equipped in such a manner that the transfer of persons and goods can be undertaken safely without endangering persons, the drilling rig, ships, helicopters or goods or exposing them to risk; alternative possibilities shall be provided for transfer of persons and goods.

 

   24.    (1)        Every drilling rig shall be supplied with a helicopter deck.

            (2)        A helicopter deck shall be placed, designed and marked in such a manner as to ensure an unobstructed and safe flight path to and from the helicopter deck.

            (3)        A helicopter deck shall have a non-slip surface and shall be designed and equipped in such a manner that the helicopter used can be held properly in place and refuelled.

            (4)        A helicopter deck shall be equipped with a safety net, and adequate collection system for oil spills and shall have proper access arrangements.

            (5)        A drilling rig shall have such equipment and installations as are necessary for good and safe helicopter operations in accordance with the regulations applicable.

            (6)        The helicopter deck on the drilling rig shall have as a minimum requirement strength and size adequate to take a “Bell 205” helicopter or one of a similar size.

 

   25.    (1)        The drilling equipment on the drilling rig, including the power system, mud system, marine riser, pipehandling system, blowout preventers and activating equipment, and diverter systems and auxiliary equipment shall be suitable for the operations planned at the drilling site during the drilling period.

            (2)        Reserve equipment and any plant and installation for replacement, maintenance and repair of drilling equipment shall be available in such quantities during the drilling operations on the drilling rig or at a supply base on shore that the drilling operations can be carried out at all times in safe manner.

 

   26.    (1)        Driving wheels, transmissions and other moving parts on draw-works, cranes and other machinery shall be properly shielded and the crown block shall be equipped with a safety device which prevents the wire from leaving the sheave.

            (2)        Hoisting equipment shall be provided with a safety device which automatically stops the draw-works so that the traveling block is prevented from contacting the crown block.

 

            (3)        All hooks on cranes shall be safety hooks or be provided with safety latches and shall be designed in such a way that they cannot accidentally catch on obstructions.

            (4)        A derrick floor shall have a sufficient number of emergency exits.

            (5)        If one or more persons work a derrick, the derrick shall be equipped with an escape device, such as a safety line with a braking device.

 

   27.    (1)        A drilling rig shall be supplied with such equipment as is necessary for undertaking proper and safe production testing of oil-bearing beds encountered in the well.

            (2)        The equipment for production testing mentioned in subregulation (1) shall be suitably placed and designed so as to minimize risks or accidents occurring during any production testing.

 

   28.    (1)        Generators, other main electrical installations and diesel engines shall be suitably split up, separated and placed in rooms built of fireproof materials and also be placed at such a distance from the derrick that there is no danger of inflammable gases reaching the generator rooms; gas detectors connected to an automatic alarm system shall be installed in the generator rooms and the exhaust systems shall be secured against overheating and spark formation.

            (2)        The ventilation system in the generator rooms shall be designed in such a way that there is constant overpressure in the generator rooms; the air intake for the ventilation system shall be placed at a safe distance from all areas where inflammable or poisonous gases can be present.

            (3)        The generators and diesel engines shall be adequately powered so that drilling operations can be continued even under abnormal circumstances in a safe manner.

 

   29.    (1)        Earthing installations shall be effectively earthed in accordance with the regulations applicable.

            (2)        All machinery, the derrick and other constructions, including containers for oil, gas or other substances which can accumulate static electricity, shall also be supplied with potencial connexion in accordance with the regulations applicable.

 

   30.    All electric installations shall be protected in such a manner as to prevent currents higher than prescribed from being introduced into the writing system, in addition all installations shall be protected against excess voltage.

 

   31.    Electrical installations and wiring shall be provided with adequate protection against the penetration of water and humidity and special care shall be taken in installing outdoor installations and wiring.

 

   32.    (1)        Portable electrical equipment to be used in danger areas on the drilling rig shall be of explosion-proof construction.

            (2)        Portable electrical equipment, with the exception of portable batter-operated lamps of approved explosion-proof construction, shall be used in rooms where danger can occur or placed where inflammable gases can be expected to be present.

 

   33.    A drilling rig shall be provided with electric light to the extent necessary to ensure safe working and living conditions on board.

 

   34.    (1)        A drilling rig shall be supplied with an emergency power supply, placed above the main deck, remote from the main power supply.

            (2)        The emergency power supply shall have its own independently placed fuel supply, sufficient to ensure at least 36 hours’ in uninterrupted operation.

            (3)        The emergency power supply shall have sufficient capacity to supply simultaneously electrical installations, which operate the sound and light signals, the warning and alarm systems, fire-fighting equipment, communication equipment, elevators, diving equipment, emergency lighting in areas as specified in subregulation (4), and equipment for determining the position relative to the well; the emergency power supply shall be led through a separate wiring system installed outside areas where the fire risk is great.

            (4)        The emergency lighting mentioned in subregulation (3) shall be installed in the living quarters, engine room, control room, in working areas, on decks, on the helicopter deck and at lifeboat and life raft stations.

            (5)        The emergency lighting at lifeboat and life raft stations shall be able to illuminate launching equipment when preparations are being made for the launching, and the side of the drilling rig and the water surface where lifeboats and life rafts enter the water.

            (6)        The emergency power supply and emergency lighting shall start to function automatically if the main power supply stops.

 

   35.    (1)        A drilling rig shall be supplied with an emergency battery system with sufficient capacity to provide 6 hours’ continuous supply of current to the alarm and communication system, lights along emergency evacuation routes, the helicopter deck and the rescue stations and shall have an emergency battery system with adequate capacity to supply current for 5 days continuously to the sound and the light signals.

            (2)        The power supply from the emergency battery system shall come on automatically if the power supply from the emergency power system stops and the normal power supply is not operating.

            (3)        The emergency battery system mentioned in subregulation (1) and the associated installations and equipment shall be of explosion-proof construction.

 

   36.    (1)        A drilling rig shall be divided into main fire zones by means of partitions and decks which are fire resistant both thermally and in terms of material strength and which are further subdivided by means of similar partitions for the protection of stairways and similar passageways and to separate the living quarters from the engine room, galleys, pump room, control room, storerooms, rooms for storage of readily inflammable and explosive materials and radioactive materials.

            (2)        Living quarters shall be subdivided with the help of fire-resisting partitions.

            (3)        Doors and windows shall have thermal strength characteristics corresponding to the frames in which they are placed.

            (4)        The arrangements for the installation of electric cables, pipes and ventilation shafts shall be executed in such a way that the safety standards required in case of fire are not reduced; ventilation systems shall where possible to divided in accordance with the categories of rooms that have to be ventilated; where this is not possible the system shall be equipped with suitable arrangements to ensure adequate fire protection, such as fire-dampers and sprinkler systems.

            (5)        Only fire-resisting paint shall be used for rooms where there is special risk of fire such as the engine room, galleys and rooms for storage of explosive or radioactive materials.

            (6)        The fuel oil used shall not have a flash point lower than 60°C; fuel oil with a lower flash point may be used for the emergency generators, but the flash point must not be below 43°C.

            (7)        Emergency switches, which can immediately stop from section to section all combustion engines including emergency diesel engines, electric lighting, and all electrical equipment with the exception of the alarm and communication system, sound and light signals, lights along emergency escape routes, the helicopter deck and rescue stations, shall be placed in central positions above the main deck.

            (8)        It shall be possible to stop all oil pumps, oil-fired systems and the ventilation system for the engine room from a central position outside the rooms in which the installations are placed.

            (9)        It shall be possible to interrupt the flow in each pipeline leading from an oil tank below the top of the tank directly at the tank and at some place outside the room in which the tank is placed.

            (10)      Oil which has drained, leaked or been spilled from oil tanks or oil installations shall be led through pipes to an oil spill tank of suitable size and disposed of in accordance with good oil industry practice.

 

   37.    (1)        A drilling rig shall be provided with an automatic fire alarm and fire display system.

            (2)        The fire alarm and fire display system shall be equipped with manual operating systems at suitable places on the rig; the fire alarm systems shall operate both visible and audible alarms everywhere on the drilling rig.

 

   38.    (1)        A drilling rig shall have fire-fighting installations and material of a type and capacity which, so far as is possible, are protected against corrosion and permit effective fire fighting everywhere on the drilling rig; such installations and material shall be placed in suitable positions, clearly marked and ready for immediate use.

            (2)        A fire-extinguishing system shall be placed at positions where there are large amounts of inflammable materials and equipment and at particularly vulnerable places.

            (3)        A permanent fire0extinguishing system using fire-extinguishing gases shall be installed in the engine room and where there are tanks and pumps for drilling mud.

 

   39.    (1)        All explosives, such as perforating charges, on board the drilling rig will be handled with due care and caution in accordance with goods oilfield practices.

            (2)        All explosives shall be stored in clearly marked containers labeled “Danger – Explosives”.

            (3)        Storage containers shall be placed and constructed in such a way that explosive materials in case of emergency can easily be thrown over board.

            (4)        The containers shall be so placed and constructed that goods dropped from cranes cannot damage the containers.

            (5)        Electrical equipment, cables and wiring except for necessary electric installations for lighting and fire alarms shall not be present in the storage containers.

 

   40.    (1)        The drilling rig shall be provided with a lockable fireproof magazine for equipment containing radioactive sources.

            (2)        The magazine shall be placed, designed and shielded in such a way that equipment containing radioactive sources which is being stored in the magazine does not constitute a radiation hazard; particular care shall be taken to avoid radiation reaching living quarters, regularly manned working areas and passageways in normal use.

            (3)        The magazine shall be placed so that the equipment containing radioactive sources can be transported between the magazine and the place of use quickly and in a safe manner.

            (4)        A sprinkler system shall be placed in the magazine for cooling any equipment in store in case of fire in the vicinity of the magazine.

 

   41.    (1)        The drilling rig shall have the installation and equipment for telecommunication with ships, vessels and helicopters necessary for the safe conduct of operations in accordance with the regulations applicable.

            (2)        The telecommunications installation and equipment shall be designed and placed in such a manner that the risk of damage and interruption of communications during the drilling period at the drilling site is minimized; in designing and placing the installations and equipment due regard shall be taken to any requirements in force at the time in question for the operation of telecommunications installations and equipment.

            (3)        Transmitters and receivers shall be installed in a suitably designed and placed radio room and shall be adequately secured so that they are not destroyed or put out of operation by movements of the drilling rig.

            (4)        The radio room mentioned in subregulation (3) shall have easy access to the open deck.

 

   42.    (1)        Before drilling operations are started an organization and manning plan worked out by the concessionaire shall be submitted to the Minister.

            (2)        The drilling rig shall be adequately manned to carry out effectively the drilling as planned, manoeuvring and station keeping, the operation and maintenance of machinery, installations and equipment, the provisioning of the crew of the drilling rig, communication with surrounding areas, the unloading of supply ships, the servicing of helicopters and necessary safety precautions and emergency operations.

            (3)        The organization and manning plan shall show clearly the line of command and division of responsibility between the person responsible for the drilling rig as a vessel (the captain) and the person responsible for the drilling operations (the superintendent); in particular the division of responsibility shall be shown for situations where account has to be taken of opposing interests which have to be reconciled.

            (4)        When the drilling rig is in operation there shall be at least two persons on board who can assume responsibility for it; when drilling is in progress there shall also be at least two persons on board who can assume responsibility for this work.

            (5)        An operator’s representative authorized to act on behalf of the operator shall at all times be present on the drilling rig.

 

   43.    Precautions shall be taken for the avoidance of accidents during the normal operations of the drilling rig so that persons during work or sojourn on board or in the way to or from the drilling rig are, as far as possible, not exposed to risks except in case of lack of due care.

 

   44.    (1)        Head protection, eye protection, foot and leg protection, safety belts with lines and other personal safety equipment shall be used by all on board to the extent that working conditions or general conditions so require.

            (2)        Chain other than spining chains shall not be used for making up or breaking down drill pipe, ceasing strings or other like things.

 

   45.    Work shall normally not be undertaken in areas where there is lack of oxygen or where the air can be contaminated with inflammable or poisonous gases or other vapours or dust to such an extent as to endanger life or health; if, in exceptional cases, work has to be undertaken in such areas, the necessary breathing apparatus shall be used.

 

   46.    (1)        Drilling equipment on a drilling rig shall be examined at short intervals by a qualified member of the crew.

            (2)        Drilling cables shall be replaced when the work they have performed in ton-kilometres necessitates this, or as soon as they show signs of metal fatigue or wear.

 

   47.    (1)        Access to all places of work which are normally manned shall be easy and safe.

            (2)        Working areas shall as far as possible be kept clean, clear and free of obstructions; obstructions, protruding obstacles, low ceiling and similar hindrances shall be clearly marked.

            (3)        Stacking, depositing and sorage of equipment and materials including drill pipes shall only be undertaken in suitable, marked places and only in a proper manner.

            (4)        The drilling rig shall as far as possible be kept free of oil spillage.

 

   48.    if fatalities or other serious accidents occur, immediate notification shall be given to the Minister, and, in addition, an ordinary sickness report shall be forwarded in connexion with all accidents which result in a person being disabled for more than 3 days and in cases of observed occupational diseases.

 

   49.    (1)        Disposal of waste from drilling rigs and ships into the sea shall be restricted to normal, readily decomposable kitchen waste, normal waste water from kitchens, bathrooms and toilets, and drill cuttings, and only if in disposing of this materials there is no risk of damaging human or marine life and shall conform with any regulations applicable thereto.

            (2)        All other types of waste than those mentioned in subregulation (1) shall be rendered harmless in a manner acceptable to the Minister.

 

   50.    In good time before it is planned to start drilling the concessionaire shall submit to the Minister a drilling programme which shall include the following information, namely, -

(a)        the name and type of drilling rig;

(b)        the name, address, telephone number or telegraphic address of the person responsible for the drilling programme in the employment of the concessionaire or an operator;

(c)        the name, addresses and fields of responsibility for any contractors;

(d)        the names, address, telephone number and telegraphic address of the person responsible on the spot for the drilling programmes;

(e)        the position of drilling site with reference to approval obtained in accordance with Clause 28 of the Petroleum Agreement concerned;

(f)        the expected completion depth for the well;

(g)        a list showing the geological strata which are expected to be drilled through;

(h)        the casing programme which shall be accompanied by the necessary calculations, and containing details of the diameter, weight, type and quality of the casing and a description of the casing depth and cementing programme;

(i)         a description of blowout preventers including auxiliary blowout prevention equipment with make, type, size and maximum working pressure, and information on how these will be installed, in particular with a view to avoiding damage or destruction caused by settling of the sea floor or subbottom sliding, information shall also be submitted on how and how often the blowout preventers will be pressure tested and functionally tested;

 

(j)                 an assessment of the probability of encountering abnormal formation pressures in the borehole based on seismic data, or additionally, or in the alternative on experience from nearby wells, and a description of the methods to be used for detecting any such abnormal pressures;

 

(k)               an assessment of the probability of encountering shallow gas pockets in the borehole based on seaismic data or additionally, or in the alternative, on experience of nearby wells;

 

(l)                 a programme for the use and monitoring of mud and for the storage of mud and mud materials accompanied by an account, where this information is available of the chemical composition of the mud materials and any effect these may have on the environment;

 

(m)             a programme for disposal of mud and cuttings;

 

(n)               contingency plan for combating pollution;

 

(o)               a programme for logging and other surveys in the well;

 

(p)               a sampling and coring programme;

 

(q)               a programme for testing of any oil or gas bearing strata including information on the testing equipment it is proposed to use;

 

(r)                 plans for the registration and processing of data on physical environment factors, including plans for establishing of a weather forecasting system;

 

(s)                the structure and operation of supply and standby systems;

 

(t)                 plans for diving operations; and

 

(u)               plans in principle for abandonment and closing the well and for the clearing and restoring the drilling site.

 

   51.    (1)        Drilling shall not be started before the Minister has approved the drilling programme.

            (2)        Changes in the drilling programme shall not be made without permission from the Minister.

            (3)        In cases where it is absolutely necessary for reasons of safety, the drilling programme may be departed from without prior consent, but the Minister shall in such a case be notified immediately of the changes made and of the reasons for and the results of the changes.

 

   52.    (1)        Moving, including towing of drilling rigs within the offshore land shall only take place after the Minister has been informed; towing shall only be undertaken when weather and wave conditions allow this to be done safely.

            (2)        During towing, only the personnel necessary for the towing shall be on board the drilling rig.

            (3)        Moving, including towing, of drilling rigs shall be undertaken in such a way that the transport causes as little disturbance as possible to fishing, shipping and other activities in the area.

 

   53.    (1)        A drilling rig shall be positioned so as to give maximum protection to the operations performed on the drilling rig including mooring of vessels and landing and take-off of helicopters.

            (2)        In the positioning of the drilling rig all necessary safety measures shall be taken and these shall at least be in accordance with good oil industry practice under comparable conditions.

 

   54.    (1)        A derrick shall only be raised or lowered when the drilling rig is in a safe position.

            (2)        Raising and lowering of a derrick shall only be undertaken when the movements of the drilling rig and weather and light conditions allow this to be done safely.

            (3)        Before a derrick is raised or lowered a close inspection shall be made to ensure that the derrick is in a satisfactory condition and that raising or lowering can be undertaken in safety.

            (4)        If a heave compensator is installed this shall be removed or adequately secured before a derrick is raised or lowered.

            (5)        No other work shall be undertaken below or in the immediate vicinity of the derrick while this is being raised or lowered.

 

   55.    (1)        Before drilling starts all necessary safety equipment shall be checked and made ready for use.

            (2)        During drilling all necessary steps shall be taken to keep the well under control and to avoid blowouts, explosions, fire, pollution and other accidents.

            (3)        In case of accident all necessary steps shall immediately be taken to re-establish safe working conditions and bring the well under control, the Minister shall immediately be informed and any damage shall immediately be made good.

            (4)        During the work the drilling rig or the supply and standby boats shall be provided with equipment and materials which make it possible to take immediate countermeasures against pollution from any oil spill or other source.

 

   56.    (1)        The person in charge of the offgoing crew shall at the end of each shift, inform the oncoming crew of the stage of the work, any particular problems and any faults or lacks which may have arisen or have found during the period.

            (2)        The person in charge of the crew shall make certain that the equipment is in a satisfactory condition.

            (3)        A note shall be made in the appropriate daily log about faults and deficiencies, and the manner in which these have been made good shall be recorded.

 

   57.    Special care shall be taken during the loading, unloading, handling and racking of the drill pipes and casing and due precaution shall be taken to prevent racked pipes and casing from rolling or shifting.

 

   58.    (1)        During the course of drilling a vertical well, the concessionaire shall use his best efforts to limit the deviation of the well bore to not more than three degrees per 1000 feet of cumulative vertical depth.

            (2)        During the course of drilling a directional well, deviation or directional surveys shall be made at appropriate intervals so that the position of the wellbore can be calculated at any time to within 40 m of the actual position.

            (3)        Major deviations from the planned drilling direction shall be reported to the Minister; however, deviations over a short distance made with the object of correcting the drilling direction or overcoming difficulties during drilling need not be reported.

 

   59.    (1)        Every well shall be provided with the necessary casing; casing string shall be of such diameter, weight and type and in general produced in such a manner that they can withstand the effects that can be expected in the borehole during drilling and any production.

            (2)        The installation of used casing is not allowed.

            (3)        The casing string shall be run and cemented in such a manner that the borehole at all times can be kept intact and so that all uncontrolled movements of fluids into the borehole are avoided.

            (4)        All relevant geological, geotechnical and other necessary date shall be acquired and used for determining the setting depths and cementing intervals for the casing strings; the running and cementing of the casing strings and the mounting of the blowout preventer assemblies shall be undertaken in such a manner, to such an extent and at such times that the well can always be kept under control, and so that pollution of the air, the sea, sea floor or the subsoil can be avoided and in such a manner that exploitable occurrences in the subsurface can be protected.

            (5)        The cement used shall be of such a type and shall be used in such a way that, in addition to fulfilling the requirements in subregulations (3) and (4), it can prevent unacceptable movements of formation fluids in the annuli between the formation and the casing strings or between the various casing strings; the cement shall support the casing strings and reduce the possibilities for corrosion thereof.

            (6)        Where it is possible, drive or structural casing shall be cemented throughout its length.

            (7)        Where it is possible conductor casing and surface casing shall be cemented for their length but the Minister may permit cementing of the surface casing to 50m below the wellhead.

            (8)        Intermediate casing and production casing shall be cemented so that the cement reaches not less than 100m above the shoe of the preceding casing string; in no case shall intermediate casing strings or production casing strings be cemented for less than 25 per cent of their full length without special permission of the Minister.

            (9)        Liners shall be cemented for their full length unless otherwise approved by the Minister.

            (10)      After a casing string is cemented, the cement shall be given adequate time to set under pressure sufficient to keep the cement in place before drilling is resumed; the setting time shall be established for the particular consignment of cement and the setting test shall be undertaken with due regard to the pressure and temperature conditions to be expected in the well.

            (11)      After the conductor string and succeeding strings have been run and cemented, they shall be pressure tested; the test pressure applied at the shoe of each casing string shall not be less than the internal pressure which the casing string shall not be less than the internal pressure which the casing string can be expected, according to calculations, to be exposed; the pressure shall not exceed the maximum working pressure for the casing string; the test pressure shall be maintained for not less than 15 minutes; the maximum permitted surface pressure reduction in that period is 5%.

 

   60.    (1)        Apart from drilling before setting drive casing and conductor casing, drilling shall not be carried out before blowout preventers and the auxiliary equipment have been installed.

            (2)        The Minister may, however, require that a marine riser diverter or a blowout preventer assembly be installed before drilling the conductor hole.

            (3)        Before the hole is drilled for the surface casing, blowout preventer equipment shall be installed comprising at least a beg-type preventer, a ram-type preventer with pipe rams, a ram-type preventer with shear rams and a diverter system with a marine riser.

            (4)        After the surface casing has been cemented, blowout preventer equipment shall be installed comprising at least a bag-type preventer, a ram-type preventer with shear rams, two ram-type preventers with pipe rams and a diverter system.

 

   61.    (1)        The blowout preventers specified in regulation 60 shall be so constructed and have such strength that they, together with the casing strings, can withstand all pressures that can be expected in the borehole.

            (2)        The blowout preventers shall be provided with a remote control which can be operated manually from the driller’s stand; the blowout preventers shall furthermore be equipped with an extra remote control which can be operated independently and which is placed at a safe distance from the derrick, the extra remote control shall be such that it can easily be reached if the control panel at the driller’s stand is put out of operation or cannot be reached; the extra remote control shall be directly connected to the main unit of the control panel, which shall not be installed on the derrick floor.

            (3)        The control panel shall clearly indicate whether the blowout preventers are open or closed.

            (4)        The accumulator system required to operate the hydraulic system of the blowout preventers shall have sufficient capacity to function at the maximum pressures that can be expected to occur in the well during drilling and to permit the opening and closing of all blowout preventers at least twice; the diverter system shall be supplied from a separate accumulator.

 

   62.    (1)        An inside blowout preventer assembly and an open/closed drill string safety valve shall be available on the derrick floor and shall be ready for instant use; this safety equipment shall be suitable for the types of drill pipes that are in use.

            (2)        During drilling a Kelly cock shall be installed at the top of the Kelly and one at the bottom of the Kelly; the lower Kelly cock shall be of a type that can pass through the blowout preventer assembly.

 

   63.    (1)        During drilling and during the running and cementing of casing strings the blowout preventers shall be pressure tested and functionally tested at regular intervals.

            (2)        Pressure testing of all the blowout preventers and accessory equipment shall be undertaken as follows-

(a)        ram-type preventers shall be tested to the maximum permitted working pressure; bag-type preventers shall be pressure tested to not more than 70% of the maximum working pressure;

(b)        whenever a blowout preventer assembly is installed it shall be pressure tested;

(c)        before drilling is resumed after cementing of casing strings the assembly shall be pressure tested;

(d)        during drilling the assembly shall be pressure tested at least once weekly; and

(e)        after the repair of a blowout preventer assembly if it has been dismounted it shall be pressure tested.

            (3)        Functional testing shall be undertaken as often as necessary, not less than each time the drill pipe is pulled and at least once every 24 hours; a note on such testings shall be made in the daily drilling report; bag-type preventers shall however be functionally tested only once a week and always with the drill string in the hole.

 

   64.    (1)        During drilling, drilling mud of a proper composition shall be kept circulating in the well, the mud shall be kept screened and regularly controlled; and materials which may cause explosions or fire shall be removed, the drilling mud shall have such density and composition as is required by the geological conditions and other circumstances.

            (2)        Sufficient additional quantities of drilling mud and extra mud materials shall be readily available on the drilling rig at all times so that the well can always be kept under control; extra materials for weighing the drilling mud shall be available so that they can be rapidly added to the mud in circulation.

            (3)        The mud system on the drilling rig shall be provided with adequate means for separating and removing gas; in areas where there are shale shakers and mud tanks installed there shall be gas detectors and explosion meters fitted, which shall be connected to a visual and audible warning system.

            (4)        The level of drilling mud in the mud tank shall be readable at the control panel of the driller’s stand; the mud pit level indicator shall also be connected to a visual and audible warning system which is activated by high and low level in the tank.

            (5)        In addition to the mud-pit level indicator, mud monitoring equipment in accordance with the best current technology shall be installed and used.

 

   65.    (1)        When using drilling mud, when disposing of drilling mud and cuttings, and when cleaning areas where drilling mud has been spilled, acre shall be taken to ensure that there is no pollution of the sea.

            (2)        Oil-Based mud shall not be used without special permission form the Minister.

 

   66.    (1)        Gas detectors and explosion meters shall be installed in readily visible places and shall be connected to a warning system which can be heard everywhere on the drilling rig where there is a risk of gas explosion occurring.

            (2)        If poisonous gases, including hydrogen sulphide, are encountered during drilling all necessary safety precautions shall be taken to avoid accidents; information on any such larger gas accumulations and on the safety precautions taken shall immediately be sent to the Minister.

            (3)        In addition to the required sets of firemen’s equipment an adequate number of apparatuses for full breathing protection shall be readily available at suitable places on the drilling rig.

 

   67.    (1)        A formation flow test shall only be conducted under observance of all necessary safety precautions and only when weather and wave conditions permit.

            (2)        When a formation flow test is conducted a valve shall be mounted in the test assembly which permits the closing of the test assembly at the packer.

            (3)        A formation flow test shall only be conducted in open hole if permission has been obtained for the particular test from the Minister.

            (4)        In connexion with perforating, hydraulic fracturing, acidizing or other chemical treatment of reservoir rocks all necessary safety precautions shall be observed; such operations shall only be undertaken when light, weather and wave conditions permit.

 

   68.    (1)        Before the work mentioned in regulation 67 is started the drilling rig shall be cleared of all obstructions; only the personnel necessary for the operation shall be on or below the derrick floor or in the immediate vicinity; all necessary precautions against fire shall be taken and the fire-fighting equipment shall be ready for immediate use.

            (2)        When the work mentioned in regulation 67 has been completed the drilling rig shall immediately be cleared and cleaned; the clearing and cleaning shall be undertaken in such a way that there is no pollution of the sea.

 

   69.    (1)        During acidizing operations persons who may come in contact with acid shall wear protective clothing, including face masks, gloves and boots.

            (2)        Acid containers shall be handled with care and shall be properly secured during transport and use.

            (3)        A reasonable amount of neutralizing material shall be readily available for neutralizing any spillage of acid.

 

   70.    (1)        During drilling, all necessary logs shall be run for the determination of lithological boundaries and for determining porosity and fluid saturation of all potential reservoirs.

            (2)        During drilling, cuttings samples, sidewall samples and cores shall be taken as necessary to determine the stratigrahic succession and to determine the physical properties and fluid contents of reservoir rocks.

            (3)        The Minister may require that specific logs be run and specific samples collected.

 

   71.    Wells where petroleum discoveries have been made shall be secured in a proper manner; the security precautions shall be such that the well is protected against damage from external factors and that the air, sea, sea floor and its subsoil are protected against pollution.

 

   72.    The Minister shall be informed at least 24 hours in advance of any planned lengthy discontinuation of drilling and of resumption of drilling operations.

 

   73.    Drilling operations shall be planned and undertaken in such a manner that divers do not participate in routine operations; divers shall only be used when there are unforeseen necessary repairs, in urgently required inspections of the drilling rig and when routine operations cannot be carried out.

 

   74.    (1)        All persons taking part in diving operations shall be familiar with the work and shall have been trained in the use of the particular equipment.

            (2)        All divers shall have a medical examination at regular intervals.

 

   75.    If diving is being undertaken at a depth greater than 50 m the concessionaire shall ensure that decompression and other facilities and services are available to provide prompt and efficient treatment of any accidents that can arise in connexion with diving operations.

 

   76.    (1)        All diving operations shall be undertaken in accordance with the regulations applicable at the time in question.

            (2)        Diving operations shall be undertaken in a proper manner and shall only be undertaken when drilling operations and weather wave conditions permit, and only when the person in charge of operations on board the drilling rig has given his consent.

            (3)        The person in charge of drilling operations and the person in charge of the drilling rig shall ensure that within their fields of responsibility all necessary precautions are taken to permit safe diving.

            (4)        Diving operations shall only be undertaken after each participant has been instructed in detail in each particular case; the work shall be undertaken under constant supervision from and communication with the drilling rig and any diving vessels in use; during operations a reserve diver with the necessary equipment shall be ready to come to assistance.

            (5)        No diver shall be required to dive if he feels ill, unwell or in any other way not fully able to dive.

 

   77.    If a decompression chamber is being used in connextion with diving operations, satisfactory means of rescue shall be available on the drilling rig for divers who are undergoing decompression.

 

   78.    All diving operations shall be recorded in a diving log.

 

   79.    In case of blowout or an oil spill the concessionaire shall immediately take all steps necessary to bring the situation under contol, and to limit the damage, and shall take whatever steps are necessary to restore the environment as far as possible to the condition it was in before the accident occurred.

 

   80.    (1)        The concessionaire shall be at all times alone or in cooperation with other concessionaires maintain effective system for combating pollution from oil.

            (2)        The emergency equipment shall in particular be chosen with a view to permitting mechanical clean-up of an oil spill.

            (3)        Any chemical for combating oil spills, whose use could be considered in particular cases, shall be approved by the Minister and the use of such chemicals shall require permission in each individual case from the Minister.

 

   81.    The concessionaires shall rapidly inform each other if they observe conditions that can lead to a blowout.

 

   82.    In case of a blowout a relief well shall be started as soon as possible if the Minister considers this necessary.

 

   83.    (1)        Before drilling is started, the concessionaire shall have ensured that in case of a blowout a suitable drilling rig can reach the drilling site as quickly as is reasonably possible with a view to drilling a relief well.

            (2)        The concessionaire shall inform the Minister in writing of how the obligation contained in subregulation (1) has been complied with; the Minister shall be kept currently informed until the drilling has been completed.

            (3)        The concessionaire shall ensure that the owner and user of a drilling rig being used to drill a relief well do not suffer any financial loss in this connexion.

 

   84.    In case of a blowout or an oil spill, the concessionaire shall bear all expenses in connexion with an investigation of the extent and effects of pollution which the Minister wishes to undertake to provide information about any damage including damage to fishing.

 

 
 

 

 

   85.    In the event of any contravention of any of these regulations the concessionaire shall be guilty of an offence and liable to a fine of R.100,000 and to imprisonment for 6 months; or in the event of a continuing offence to a fine of R.20,000 for each day during which the offence continues.

 

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Petroleum Mining (Offshore Installations) (Emergency Procedures) Regulations,

(12th March, 1980)

 

ARRANGEMENT OF REGULATIONS

   1.      Citation

   2.      Interpretation

   3.      Application

   4.      Emergency procedure manual

   5.      Instruction notices

   6.      Muster list

   7.      Muster

   8.      Drills

   9.      Log

   10.    Stand-by services

   11.    Duties of persons

   12.    Offences

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   1.      These Regulations may be cites as the Petroleum Mining (Offshore Installations) (Emergency Procedures) Regulations.

 

   2.      In these Regulations, unless the context otherwise requires-

“concessionaire” means a licence or a party to a petroleum agreement, including a person to whom rights under a petroleum agreement have been assigned;

 

“emergency” includes an apprehended emergency;

 

“emergency equipment” means any equipment of an offshore installation provided for use in an emergency;

 

“emergency procedure manual” has the meaning given by regulation 4(1);

 

“emergency station” has the meaning given by regulation 6(1);

 

“fixed offshore installation” means an offshore installation which is not a mobile offshore installation;

 

“installation manager” includes any person made responsible by the owner for safety, health and welfare on any offshore installation;

 

“mobile offshore installation” means an offshore installation which can be moved from place to place without major dismantling or modification, whether or not it has its own motive power;

 

“muster list” has the meaning given by regulation 6(1);

 

“stand-by-vessel” has the meaning given by regulation 6(1);

 

   3.      These Regulations shall apply to-

 

(a)        established fixed offshore installations maintained for underwater exploitation or exploration in offshore land;

(b)        mobile offshore installations, not being dredging installations registered as vessels, when stationed in offshore land.

 

   4.      (1)        These shall be provided in respect of every offshore installation which is normally manned a book or books (in these Regulations referred to as the “emergency procedure manual” specifying the action to e taken in the event of an emergency on or near the installation and in particular, in the following cases-

            (a)        a fire or explosion;

            (b)        a blow-out of a well;

            (c)        a leak or spillage of any oil or gas;

(d)        a storm or severe weather conditions affecting the stability of the installation;

(e)        a movement of the sea bed affecting the stability of the installation;

            (f)        a failure of the structure of the installation;

(g)        a failure of the equipment of the installation affecting the safety of persons;

(h)        a failure of the means for keeping the installation on station;

            (i)         a collision involving the installation;

            (j)         an accident involving a helicopter;

            (k)        a person falling from the installation; and

            (l)         a death, a serious injury or illness;

 

            (2)        These shall also be specified in emergency procedure manual-

(a)        a code of signals suitable for transmission by means of general alarms system for signifying the occurrence of specified emergencies and the action to be taken in respect of any of them, and instructions for the transmission of any of those signals by those means;

(b)        instructions for the operation of the emergency equipment;

(c)        instructions for rendering safe any work being carried on or any equipment being used on or near the installation in the event of an emergency;

(d)        instructions for evacuating all persons on or near the installation therefrom; and

(e)        the place on the installation at which plans showing the location of the emergency are to be provided.

 

            (3)        There shall be specified in the emergency procedure manual-

(a)        the emergency services arranged for divers diving near the installation;

(b)        the action to be taken by the stand-by vessel for the transmission of emergency signals, the recovery of persons in the sea and the evacuation of persons from the installation;

(c)        any action arranged by the owner of the installation to be taken by any person on land or another installation for providing assistance; and

(d)        any available search and rescue services.

  

            (4)        A copy if the emergency procedure manual in English shall be made available in a suitable and readily accessible place on the installation.

            (5)        The owner of an offshore installation which is normally manned shall, upon demand, furnish to the Minister a copy of the emergency procedure manual.

            (6)        If the Minister is of the opinion that the emergency procedure manual does not make sufficient provision for securing safety in the use of emergency equipment and the taking of action in the event of an emergency on or near the installation, he may serve on the owner of the installation a notice in writing stating that he is of that opinion and specifying the matter for which, in his opinion, provision or, as the case may be, different provision ought to be made and the nature of the provision that, in his opinion, ought to be made, and the owner of the installation shall, before the expiration of such period beginning with the date of service of the notice as may be specified therein, amend the emergency procedure manual accordingly.

 

   5.      In ay space on an offshore installation in respect of which there is a provision in the emergency procedure manual that particular action be taken in an emergency, there shall be displayed a notice specifying that provision; the notice shall be in clear and permanent lettering in English and such other languages as are appropriate and shall be displayed in such a position that it can be easily read.

 

   6.      (1)        There shall be provided in respect of every offshore installation when it is manned by a or more persons a list (in these Regulations referred to as the “muster list”), showing in respect of every person on the installation the station to which each person shall go in the event of an emergency, (in these Regulations referred to as the “emergency station”), and any duties to be carried out in an emergency which are assigned to particular persons.

            (2)        The muster list shall set out the person appointed to be in charge of each emergency station and the persons to whom duties are assigned in connexion with the following matters-

                        (a)        the closing of wells;

(b)        the closing of pipes carrying hydrocarbons or other flammable substances and the associated valves and vents;

                        (c)        the closing of fire doors and ventilators;

                        (d)        the closing of watertight doors;

                        (e)        the stopping of machinery;

(f)                the extinction of fire;

(g)                the equipment of survival craft and liferafts and making them ready for use;

(h)               the launching of survival craft and liferafts; and

(i)                 the securing of the safety of visitors to the installation.

 

            (3)        Copies of the muster list shall be displayed in English and all appropriate language in such positions that they may be easily read in all accommodation arrears, and at each emergency station copies of the parts of the muster list relevant to the particular station shall be similarly displayed.

 

   7.      (1)        On every offshore installation which is normally manned musters shall take place so as to ensure that the persons on the installation are practised in the duties set out as assigned to them in the muster list at least once in every 28 days, and, in the case of a mobile installation, immediately on arrival at, or immediately before departure from, a station.

            (2)        Every person on the installation shall be made aware of the signal for summoning all persons to their emergency stations and be instructed that, on the signal being given on the general alarm system, he is required to go to his emergency station.

            (3)        Every person on the installation not in charge of an emergency station shall be instructed that, on arrival at his emergency station, he is required to report to the person in charge of the station.

            (4)        Every person in charge of an emergency station shall be instructed that his duties as such a person include-

(a)        establishing the whereabouts of every person required to go to the station;

(b)        requiring every person arriving at the station to state what duties are set out as assigned to him in the muster list; and

(c)        reporting to the manager as to the whereabouts of every person required to go to the station and as to the knowledge of their duties of persons arriving at the station.

 

   8.      (1)        There shall be held at intervals not exceeding 12 days on every offshore installation which is normally manned a drill whereby-

(a)        each person on the installation to whom duties have been assigned in the event of emergency involving the use, handling or operation of emergency equipment is instructed in the correct use, handling or operation of that equipment; and

(b)        all equipment used in the drill is examined, cleaned and, where appropriate, recharged or replaced and all portable equipment so used is returned to the place where it is ordinarily kept.

 

            (2)        At intervals not exceeding 8 weeks there shall be held on every offshore installation which is normally manned and is equipped with totally enclosed motor propelled survival craft a drill in relation to the loading, swinging out and, if reasonably practicable, lowering over the water of all such craft.

 

   9.      An entry in respect of every muster and every drill held pursuant to regulation 7 or 8 shall be made in a log maintained for the purpose.

 

   10.    (1)        There shall be present within 5 nautical miles of every offshore installation when it is manned a vessel, (in these regulations referred to as the “stand-by vessel”) ready to give assistance in the event of an emergency on or near the installation and-

(a)        which is capable of accommodating safely on board all persons who may be on the installation at any time; and

(b)        which is equipped to provide first aid treatment for all such persons.

            (2)        Means for radio communication on appropriate wavelengths between every manned installation and its stand-by vessel shall be provided for at all times by suitable and effective equipment; alternative means of communication shall also be provided on every manned installation and its stand-by vessel.

 

   11.    In respect of any offshore installation it shall be the duty of-

(a)        the owner of the installation and the concessionaire to ensure that there Regulation are complied with;

            (b)        the installation manager to ensure that-

                        (i)         regulation 6 to 9 are complied with;

(ii)        every person subject to his authority is made aware of those provisions of the emergency procedure manual and of these Regulation which are relevant to him; and

(iii)       the appropriate measures specified in the emergency procedure manual are taken in the event of an emergency on or near the installation; and

(c)        every person on the installation to acquaint himself with his emergency station and any duties assigned to him in the event of an emergency.

 

   12.    (1)        In the event of any contravention of any of these Regulations in or in connexion with, or in relation to, an offshore installation, the installation manager, the concessionaire and the owner of the installation shall each be guilty of an offence.

            (2)        In the event of any contravention by any person of regulation 11(c), that person shall also be guilty of an offence.

            (3)        If any person enters any information knowing it to be false in any record or any other document required to be provided or maintained under these Regulations or knowingly falsifies any such record or document or uses any such record or document for the purposes of these Regulations knowing it to be false in a material particular, that person shall be guilty of an offence.

            (4)        It shall be a defence in any proceedings for an offence under subregulation (1) or (2) for the accused to prove-

(a)        that he exercised all due diligence to prevent the commission of the offence; and

(b)        that the relevant contravention was committed without his consent, connivance or willful default.

            (5)        Any person who contravenes any of the provisions of these regulations shall be guilty of an offence and shall be liable to a fine of R.100,000 and to imprisonment for 6 months, or in the case of continuing offence to a fine of R.20,000 for each day during which the offence continues.

 

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