ICPLP UNIT ONE

BY: RACHEL
ELSIE
DUFIE
Sub Heading and
Sovereignty 1 Petroleum
Resources
OUTLINE OF PRESENTATION

SUB-TOPIC PRESENTER

State Sovereignty Elsie

Legal Framework for Petroleum

Regimes

Objectives in Petroleum Exploration Rachel

and Development

Accountability and Governance Dufie

State Sovereignty
 What is State Sovereignty?

• Sovereignty is the authority of a state to govern itself.

• In the context of petroleum resources, this means that the State has exclusive
dominion and ownership over the geological formations within its national borders,
including any natural resources found within such strata.

• State ownership of petroleum resources is premised on the principle of national

sovereignty.

• In order to recruit international petroleum companies, it is fundamental that States

establish a claim of ownership that is recognised under both national and international
legal systems.
 Ghana’s Sovereignty Over Petroleum
Resources – International Legal Systems

• State sovereignty over petroleum resources is well-recognised in international law.

• The United Nations (UN), through its general assembly, has over the years
expressed a view on the issue of State sovereignty.

• Various treaties and conventions have also given legal definitions to State
sovereignty over petroleum resources within their land mass and territorial seas.
Coastal states hold rights to mineral resources that are located within their
Exclusive Economic Zone as well as projections of their respective Continental
Shelf.
 Ghana’s Sovereignty Over Petroleum
Resources – International Legal Systems

• Some of the resolutions of the UN General Assembly include:

a. GA Resolution 1803 (XVII) of 14 December 1962

b. UNGA Resolution 3201 on the Establishment of a New International Economic Order

c. Charter of Economic Rights and Duties of States (UNGA Resolution 3281 of 1975 (XXIX)

• Some of the International Treaties and Conventions include:

a. Geneva Convention on the Continental Shelf of 29 April 1958

b. United National Law of the Sea Treaty of 10 December 1982

 Ghana’s Sovereignty Over Petroleum
Resources – National Legislation

• The sovereign State of Ghana is a unitary republic consisting of those territories

comprised in the regions which immediately before the coming into force of the 1992
Constitution, existed in Ghana, including the territorial sea and the air space. (Article
4(1), 1992 Constitution)

• Every mineral in its natural state in, under or upon any land in Ghana, rivers, streams,
water courses throughout Ghana, the exclusive economic zone and any area covered
by the territorial sea or continental shelf is the property of the Republic of Ghana and
shall be vested in the President on behalf of, and in trust for the people of Ghana.
(Article 257(6), 1992 Constitution)
 Ghana’s Sovereignty Over Petroleum
Resources cont’d

• Any transaction, contract or undertaking involving the grant of a

right or concession by or on behalf of any person including the
Government of Ghana, to any other person or body of persons
howsoever described, for the exploitation of any mineral, water or
other natural resource of Ghana made or entered into after the
coming into force of this Constitution shall be subject to ratification
by Parliament. (Article 268(1), 1992 Constitution)
Ghana’s Sovereignty Over Petroleum Resources
cont’d

• Petroleum existing in its natural state in, under or upon any land in Ghana,
rivers, streams, water courses throughout Ghana, the exclusive economic
zone and any area covered by the territorial sea or continental shelf, is the
property of the Republic of Ghana and is vested in the President on behalf
of and in trust for the people of Ghana. (Petroleum (Exploration and
Production) Act, 2016, Act 919, section 3)

• However, the management of the petroleum resources by the State has to

be conducted in accordance with the principles of good governance,
including transparency and accountability. (Act 919, section 4)

• It follows that the petroleum resources found in the country belong to the
State and the State is entitled to enact laws as it deems fit to regulate its
use.
Sub Heading
Legal 1
Framework of the
Petroleum Regime in Ghana
The Petroleum Regime in Ghana

• The petroleum regime in Ghana provides a framework for the

country to manage the exploration and development of its
petroleum resources.

• In ensuring the proper management of petroleum resources,

various legislation have been enacted, forming the legal
framework for the petroleum regime in Ghana.
i.Petroleum (Exploration and Production)
Act, 2016 (Act 919)

• This Act provides the legal framework for petroleum exploration and
production activities in Ghana. This includes activities in, under and
upon its territorial land, inland waters, territorial sea, exclusive
economic zone and its continental shelf. (section 1)

• Its object is to ensure safe, secure, sustainable and efficient petroleum

activities in order to achieve optimal long-term petroleum resource
exploitation and utilisation for the benefit and welfare of the people of
Ghana. (section 2)
i.Act 919 cont’d

• Some of the salient provisions in the Act are on;

a. Licensing and Agreements – sections 5,9,10,24(1)

b. Establishment of petroleum register – section 56

c. Health, Safety and Environment – sections 73 and 74

d. Local Content – sections 63, 64 and 65

 ii. Petroleum Commission Act, 2011 (Act 821)

• This Act establishes the Petroleum Commission as a body corporate

with the object of regulating and managing the utilisation of
petroleum resources and to co-ordinate the policies in relation to
them.
(Sections 1 and 2)

• The Act provides for the funding of the Petroleum Commission

through monies provided by Parliament, monies that accrue to the
Commission in the performance of its functions, donations and
grants to the Commission for its activities and any other monies
approved by the Minister for Finance.
(Section 14)
 iii. Petroleum Revenue Management Act, 2011
(Act 815) as amended by Act 893

• This Act establishes the legal framework for the collection, allocation
and management of petroleum revenue derived from upstream and
midstream petroleum operations in Ghana. (Section 1)

• It sets out rules for the collection, allocation, investment, and

disbursement of petroleum revenues, with the aim of ensuring
transparency, accountability, and sustainable development.
iii. Act 815 (cont’d)

• The Act establishes the Petroleum Holding Fund (PHF) as a central fund
where all petroleum revenues are deposited.

• The PHF serves as an account for the collection, allocation, and

disbursement of petroleum revenues. (sections 2 and 3)

• The Act outlines the allocation of petroleum revenues into three main
funds, Ghana Stabilization Fund and Ghana Heritage Fund (Ghana
Petroleum Funds) and Annual Budget Funding Amount. (sections 9 and
10)

• It also provides guidelines for the investment and management of the

funds. (section 21 on Annual Budget Funding Amount)
iv. Ghana National Petroleum Corporation
(GNPC) Act, 1983 (PNDCL 64)

• This Act establishes the GNPC as the national oil company

responsible for Ghana's participation in petroleum exploration,
production, and related activities.
Section 1

• It outlines the functions, powers, and responsibilities of the GNPC,

including its role in promoting local content and managing Ghana's
interests in petroleum agreements.
v. Petroleum (Exploration and Production)
(General) Regulations, 2018 (L.I. 2359)

• The LI 2359 aims to regulate and govern various aspects of petroleum

exploration and production activities.

• It provides a framework for the general operations and activities in

the upstream petroleum sector.

• Some of the key provisions are on:

a. Licensing and permits – Regulation 5
b. Procedure for the grant of petroleum agreements – Regulations 9-
21
c. Decommissioning and abandonment – Regulations 61-65
vi. Petroleum (Exploration and Production)
(Health, Safety and Environment)
Regulations, 2017 (LI 2258)

• LI 2258 aims to regulate and govern various aspects of petroleum

exploration and production activities to ensure safety, environmental
protection and compliance with legal requirements.

• It covers various aspects such as:

a. Management systems – Regulation 3
b. Health and safety plans – Regulation 8
c. Risk reduction principles – Regulation 9
d. Design of petroleum facility – Regulation 15
vii. Petroleum (Exploration and Production)
(Data Management) Regulations, 2017 (LI
2257)
• The Regulations apply to the reporting and management of petroleum data
obtained from the conduct of petroleum activity within Ghana.

• This includes:
a. The receipt, interpretation, analysis and retrieval of petroleum data
b. The provision of a safe environment for the storage of petroleum data submitted
c. the efficient management of petroleum data between the licensee, contractor
sub-contractor or the corporation and the commission and
d. the documentation and reporting on information related to the acquisition and
submission of petroleum data

• It also places the duty of classification of petroleum resources, naming prospects

generated, well and wellbore, petroleum discovery, petroleum facility and field on
the Petroleum Commission
 viii. Petroleum (Exploration and Production)
(Measurement) Regulations, 2017 (LI 2246)

• Its purpose is to ensure that an accurate measurement and allocation

of petroleum forms the basis for the determination of revenue that
accrues to the Republic, a contractor, licensee or the Corporation –
Regulation 2

• It provides regulations on:

a. Measurement equipment and quality measurement systems –
Regulations 7-19

b. Verification and calibration – Regulations 20 and 21

ix. Petroleum Commission (Fees and Charges)
Regulations, 2015 (LI 2221)

• These regulations provide the requirement that before a contractor,

subcontractor, licensee or any other person engages in petroleum
activities or provide a service in the upstream petroleum industry, the
person must be registered with the Petroleum Commission and
obtained a permit from the Petroleum Commission – Regulation 1
• It also contains provisions on fees to be paid and requirements for:
a. Grant of permits – Regulation 3
b. Extension of exploration working period and appraisal period –
Regulations 10 and 11
c. Registration of interests and regulatory supervisory services –
Regulation 13
x. Petroleum (Local Content and Local
Participation) Regulations, 2013 (LI 2204)

• A contractor, subcontractor, licensee, the GNPC or other allied entity carrying out
a petroleum activity is required to ensure that local content is a component of
the petroleum activities engaged in by that contractor, subcontractor, etc –
Regulation 3

• It requires that an indigenous Ghanaian company be given first preference in the

grant of a petroleum agreement or license and at least a 5% equity participation
in petroleum agreement – Regulation 4

• It also establishes the requirement for other plans such as:

a. Local content plan – Regulation 7
b. Employment and training sub-plan and succession plan – Regulation 17
c. Program for research and research development sub-plan – Regulation 20
d. Technology transfer program and reports – Regulations 22 - 26
Objectives in Petroleum
Exploration and Development
What Are Ghana’s Objectives for Petroleum Exploration
and Development?

• Exportation of Crude Oil

Oil Exports in Ghana increased to 318.20 USD Million in April (Trading Economics,
2023)

• Domestic Self Sufficiency

Tema Oil Refinery and Platon Oil Refinery

• Direct foreign investment in Exploration

Tullow to invest $4.4 billion in Ghana oil exploration
What Are Ghana’s Objectives for Petroleum Exploration
and Development Cont’d?

• Transfer of Technology in Petroleum Operations

• Acquisition of Geological Information

Acquired during appraisal and reconnaissance in Act 919

• Utilization of Natural Gas for Power Generation

Tullow’s Tweneboa, Enyenra, Ntomme (TEN) fields produces gas for the Gas
Processing Plant at Atuabo

• Establish a claim of sovereignty with rival States

Ghana – Ivory Cast Maritime Dispute
What are the Petroleum Companies Objectives?

• Profitable Operations
Tullow recorded a gross profit of gross profit of $403 million in 2020

• Exportation of petroleum and repatriation of income

Vitol trades 8 million barrels per day of crude oil and products and, at any
time, has 250 ships transporting its cargoes

• Shareholder Value
ENI: 2022 adjusted net profit attributable to Eni shareholders was €13.3 billion
Tullow: The profit on ordinary activities after taxation of the Group for the year
ended 31 December 2022 was $49 million
What are the Petroleum Companies Objectives Cont’d?

• Operatorship
High cost of operating a field means businesses want to dominate their fields
Eni, Springfield, Vitol Saga

• Increase proven reserves

• Sustainability and protection of the environment

Eni, Tullow and Vitol release annual ESG reports
What do the parties bring to the relationship?

The Government Petroleum Companies

1. The Petroleum 1. The Technology & Equipment

2. The Petroleum Laws & 2. The Technical Know- How
Regulations 3. Financial Capability
3. Model Contract 4. Commercial Experience
4. Environmental Laws &
Regulations
Sub
WhatHeading
Should 1A Ideal Petroleum
Regime Entail?
A Good Regime Must Address The Following

State Property in Petroleum Resources

- Article 257(6) of the 1992 Constitution
- Article 268(1) of the 1992 Constitution

Administrative Body
- Petroleum Commission, Petroleum Commission Act, 2011 (Act 821)

Petroleum Licenses or Agreements

- Petroleum Commission on behalf of Minister of Energy
A Good Regime Must Address The Following

Petroleum Regulations
Ghana National Petroleum Corporation Law, 1983
Petroleum Commission Act, 2011 (Act 821)
Ghana Maritime Authority, 2012
Petroleum (Exploration and Production) Act, 2016 (Act 919)
Local Content and Local Participation Regulations LI 2204 and its amendment LI
2435
Petroleum Exploration And Production-Data Management Regulation, 2017
(L.I2257)
Petroleum Exploration And Production – HSE Regulations 2017 (L.I 2258)
Petroleum Exploration And Production (General) Regulations), 2018 (L.I 2359)
A Good Regime Must Address The Following

Fiscal Package

Petroleum
Income Tax Act, Value Added Tax, Revenue
2015 (Act 896) 2013 Management Act,
2011 (Act 815)
A Good Regime Must Address The Following

Assignment
Act 919, Section 16

Declaration Appraisal- Act 919, Section 25

of
Commercialit
y Reconnaissance – Act 919, Section 9
A Good Regime Must Address The Following

Health, Safety Health, Safety Environment Regulations LI 2258

Environment
Health, Safety, Security And Environment (HSSE) – Manual for Energy
Sector Organizations

Diligent Act 919, Section 26

Development

Minimum Work Act 919, Section 23

Obligations
A Good Regime Must Address The Following

Transfer of Act 919, Section 62

Technology
Technology Transfer Regulations , 1992 (L.I 1547)
Ghana Investment Promotion Centre, 2013 (Act 865)
Income Tax Act, 2015 (Act 896)
Financial On Exploratory Body
Responsibility
Local Content Fund- Act 919, Section 65
ACCOUNTABILITY AND
GOVERNANCE
GOVERNANCE
• Petroleum Commission Act, 2011 (Act 821)

• AN ACT to establish the Petroleum Commission, for the regulation and the
management of the utilisation of petroleum resources.

• The object of the Commission is to regulate and manage the utilisation of

petroleum resources and to co-ordinate the policies in relation to them.

• The governing body of the Commission is the Board who are appointed by the
President.

• The president also appoints the CEO of the Commission who is responsible for
the day to day administration of the affairs of the commission.
 Functions of the Petroleum Commission

 Promote planned, well executed, sustainable and cost-efficient

petroleum activities to achieve optimal levels of resource exploitation
for the overall benefit and welfare of citizens;

 Recommend to the Minister national policies related to petroleum

activities;

 Monitor and ensure compliance with national policies, laws, regulations

and agreements related to petroleum activities;

 Monitor petroleum activities and carry out the necessary inspection

and audit related to the activities;
 Functions of the Petroleum Commission
 Ensure
I. compliance with health, safety and environmental standards in petroleum
activities in accordance with applicable laws, regulations and agreements;
II. optimum exploitation of petroleum resources;
III. optimal utilisation of existing and planned petroleum infrastructure;
IV. that contractors, subcontractors and other persons involved in petroleum
activities comply with applicable laws and regulations; and
V. compliance with fiscal metering requirements in petroleum production
activities in accordance with applicable laws and regulations;

 Promote local content and local participation in petroleum activities as

prescribed in the Petroleum Exploration and Production Act 1984 (P.N.D.C.L 84)
[Petroleum (Exploration and Production) Act, 2016 (Act 919)] and other
applicable laws and regulations to strengthen national development;
 Functions of the Petroleum Commission
 Receive and store petroleum data, manage a national petroleum repository
and at the request of the Minister, undertake reconnaissance exploration
including data acquisition;

 Receive applications and issue permits for specific petroleum activities as

required under petroleum laws and regulations;

 Assess and approve appraisal programmes; -

 Advise the Minister on matters related to petroleum activities including

I. field development plans
II. plans for the development of petroleum transportation, processing and
treatment facilities; and
III. decommissioning plans for petroleum fields and petroleum infrastructure;
 Functions of the Petroleum Commission
 Issue annually a public report on petroleum resources and activities in
Ghana in accordance with the Schedule to this Act and publish the report
in the Gazette;

 Receive information from contractors as provided for under applicable laws

and regulations;

 Analyse petroleum economic information and submit economic forecasts

on petroleum to the Minister; and

 Perform any other function related to the object of the Commission or

assigned to it under any enactment.
Accountability

• Thomas Hobbes, John Locke and Jean Jacques Rousseau all wrote
about the social contract theory in political philosophy.

• Social contract arguments typically are that individuals have

consented, either explicitly or tacitly, to surrender some of their
freedoms and submit to the authority (of the ruler, or to the decision
of a majority) in exchange for protection of their remaining rights or
maintenance of the social order.

• Flowing from that is the notion that those put in power must therefore
be accountable to the people.
 Petroleum Revenue
Management Act, 2011 (Act SOURCES OF PETROLEUM REVENUE
815) as amended by the
Petroleum Revenue
Management (Amendment)
2015 (Act 893)

AN ACT to provide the framework for

the collection, allocation and
management of petroleum revenue in
a responsible, transparent,
accountable and sustainable manner
for the benefit of the citizens of Ghana
in accordance with Article 36 of the
constitution.
Accountability

Allocation
Sovereignty over petroleum resources also means that decisions about their
allocation and use are to be made for the benefit of public welfare.

PETROLEUM REGISTER
This has been established under Act 919. (Section 56)

The Petroleum Holding Fund (PHF)

PHF is a general account located at the Bank of Ghana, which serves as the
initial repository of all petroleum payments due to the State. As the name
suggests, the amount is simply held there before disbursement. Thus, all
allocations and disbursements are made from the Petroleum Holding Fund.
PHF
PRMA
ACCOUNTABILITY- CORRUPTION
OFFICE OF THE SPECIAL PROSECUTOR

The mission and vision of the Office of the Special Prosecutor is to make corruption
costly and unattractive. They investigate and prosecute corruption and allegations and
suspicions of corruption in the country.

CHRAJ
The Commission on Human Rights and Administrative Justice exists to protect fundamental human rights and to
ensure good governance for every person in Ghana. The Commission was given a broad mandate to achieve
this mission by the 1992 Constitution of Ghana and by its enabling Act, Act 456, in 1993. The Commission’s
mandate is threefold. It encompasses:
a. A National Human Rights Institution
b. An Ombudsman, an agency which ensures administrative justice
c. An anticorruption Agency for the public sector
One of the functions of CHRAJ is to investigate all instances of alleged or suspected corruption and the
misappropriation of public monies by officials and to take appropriate steps, including reports to the Attorney-
General and the Auditor-General, resulting from such investigations
Extractive Industries Transparency Initiative
(EITI)

It is a multi-stakeholder organisation comprised of governments of implementing and supporting

countries, companies and civil society organisations.

They believe that a country’s natural resources belong to its citizens. Their mission is to promote
understanding of natural resource management, strengthen public and corporate governance and
accountability, and provide the data to inform policymaking and multi-stakeholder dialogue in the
extractive sector.

By becoming a member of the EITI, countries commit to disclose information along the extractive
industry value chain – from how extraction rights are awarded, to how revenues make their way
through government and how they benefit the public.

Through participation in the EITI, more than 50 countries have agreed to a common set of rules
governing what has to be disclosed and when – the EITI Standard.
Extractive Industries Transparency Initiative
(EITI)
The December 2022 report on Ghana can be found on their website.

What are the safeguards to ensure that

the information brought out by these
civil society organizations are actually
verifiable?

EXHIBIT A
• Checks at the Registrar of Companies reveal that JOHL was registered in Ghana as an
external (foreign) company on 15th August, 2022 with presence in the country. This
implies that at the time of lifting, JOHL had not been registered to conduct business
in Ghana.
• Furthermore, to hold interest in a petroleum block, the Petroleum (E&P) Act, 2016
(Act 919) requires the incorporation of a local company. The acquisition of a stake
and subsequent lifting of crude oil by JOHL ahead of its incorporation in Ghana is in
contravention of section 70(1)(a) of Act 919, which mandates such incorporation in
order to carry out petroleum activities in Ghana.
The Public Interest and Accountability Committee (PIAC)

PIAC is a citizens-led statutory body established under Section 51 of the Petroleum Revenue
Management Act 2011 (Act 815) as amended by the Petroleum Revenue Management
(Amended) Act, 2015 (Act 893) to provide independent oversight over the collection,
allocation and utilisation of Ghana’s petroleum revenue. PIAC has three main
objectives;

1. To monitor and evaluate compliance with the Act by government and relevant institutions
in the management and use of petroleum revenue and investments.

2. To provide space and platform for the public to debate on whether spending prospects and
management and use of revenues conform to development priorities.

3. To provide independent assessment on the management and use of petroleum revenues

to assist Parliament and the Executive in the oversight and the performance of related
functions.
PIAC releases annual reports that can be found on their website. It is the expectation of the Committee that
the general public will read the Report, and provide feedback Via the email or any of their social media
handles given.