PETROLEUM (EXPLORATION, DEVELOPMENT AND PRODUCTION) ACT.

(a) establishing an effective legal framework and institutional structures to ensure that the exploration, development and production of petroleum resources of Uganda is carried out in a sustainable manner that guarantees optimum benefits for all Ugandans, both the present and future generations;

(b) creating a conducive environment for the efficient management of petroleum resources of Uganda including—

(i) promotion of reconnaissance and exploration for petroleum in Uganda;

(ii) evaluation of discoveries;

(iii) development and production of petroleum resources;

(iv) storage of petroleum before transporting it to the delivery point; and

(v) transportation of petroleum up to a delivery point;

(d) regulating petroleum activities, including licensing, exploration, development, production and cessation of petroleum activities or decommissioning;

(e) ensuring public safety and protection of public health and the environment in petroleum activities;

(f) supporting the development of State participation and national content in the petroleum industry in Uganda; and

(g) ensuring transparency and accountability in the conduct of all activities regulated under this Act.

2. Interpretation.

(1) In this Act, unless the context otherwise requires—

"Act" means the Petroleum (Exploration, Development and Production) Act;

"authorised officer" means an officer or other person acting under the authority of the Minister or the Authority under this Act;

"Authority" means the Petroleum Authority of Uganda established by section 9;

"best petroleum industry practices" means the best available practices that are generally accepted as good, safe, transparent and efficient in carrying out petroleum activities and that can be applied globally under similar circumstances;

"block" means acreage which may be stratigraphically delineated as provided for in Schedule 3 to this Act and includes part of a block as constituted;

"code of practice" means a code of practice issued by the Minister under section 184;

"crude oil" means a naturally occurring liquid consisting of a mixture of hydrocarbons and other organic compounds found beneath the earth's surface;

"currency point" has the value assigned to it in Schedule 1;

"delivery point" means the point at which petroleum passes through the intake valve of the pipeline, vessel, vehicle or craft at a terminal or refinery in Uganda;

"development" means the planning, placement, construction and installation of facilities needed for production of petroleum;

"development area" means an area constituted by a block or blocks which, following a commercial discovery of petroleum, has been delineated for production according to the terms of the petroleum agreement;

"discovery" means to establish through drilling of a well the presence of petroleum not previously known to have existed, and which is recoverable at the surface in a flow which can be measured by petroleum industry methods;

"discovery area" means the block or blocks in an exploration area comprising the geological feature as outlined by the relevant geological or geophysical data in which a discovery is located;

"drilling" means the perforation of the earth's surface for purposes of making a discovery, establishing the extent of a discovery, or production of the discovered petroleum;

"Executive Director" means the Executive Director appointed under section 27;

"exploration" means the undertaking of activities, whether on land or water, for the purpose of discovering petroleum and includes geological, geophysical and geochemical surveys, and drilling of wells for the purpose of making a discovery and its appraisal;

"exploration area" means an area constituted by a block or blocks that are, or can be, subject to a petroleum exploration licence;

"facility" means—

(a) any structure, device or other associated installations or infrastructure including pipelines, valve stations, pump stations, compressor stations and equipment constructed, placed or used in order to carry out petroleum activities;

(b) vessel, vehicle or craft when stationary and used for drilling or support of ongoing petroleum activities; and

(c) vessel, vehicle or craft for transportation of petroleum in bulk when connected to a facility for loading of petroleum;

"field" means a geological structure or feature which hosts one or more reservoirs from which petroleum production may be commercially undertaken through a defined set of facilities;

"field development plan" means the field development plan referred to in section 71;

"flaring" means the combustion of hydrocarbons without the application of the resulting heat or gases for any useful purpose;

"gas venting" means the release of gas to the atmosphere;

"graticulation" means the division of the earth's surface into blocks for petroleum activities;

"land owner" means a person who holds or occupies land in accordance with the Land Act;

"licence" means a licence issued under this Act;

"licensee" means a person to whom a licence is granted under this Act;

"mineral" has the meaning assigned to it under the Mining Act;

"Minister" means the Minister responsible for petroleum activities;

"natural gas" means all petroleum which is in a gaseous state at 15 c at atmospheric pressure, including wet gas, dry gas and residue gas remaining after the recovery of liquid hydrocarbons;

"NEMA" means the National Environment Management Authority;

"operator" means a licensee or any other entity executing on behalf of one or several licensees, the day-to-day management of petroleum activities;

"petroleum" means—

(a) any naturally occurring hydrocarbons, whether in gaseous, liquid or solid state;

(b) any naturally occurring mixture of hydrocarbons, whether in a gaseous, liquid or solid state; or

(c) any naturally occurring mixture of one or more hydrocarbons (whether in a gaseous, liquid or solid state), and any other substances; and includes any petroleum as defined by paragraph (a), (b) or this paragraph that has been returned to a natural reservoir, but does not include coal, shale or any substance that may be extracted from coal or shale;

"petroleum activity" means planning, preparation, installation or execution of activities related to petroleum including reconnaissance, exploration, development, production, transportation, storage, and cessation of activities or decommissioning of facilities;

"petroleum agreement" means an agreement for the purpose of petroleum activities entered into by Government and another person in accordance with this Act;

"pollution" means any direct or indirect alteration of the physical, thermal, chemical, biological or radioactive properties of any part of the environment by discharging, emitting or depositing wastes or emitting noise so as to affect any beneficial use adversely, to cause a condition which is hazardous or potentially hazardous to public health, safety or welfare or to animals, birds, wildlife, fish or aquatic life, land and water sources or to plants or to cause a contravention of any condition, limitation or restriction which is subject to a licence under this Act;

"pollution damage" means damage or loss caused by pollution;

"production" means all activities relating to recovering oil and gas from a reservoir and preparing it for evacuation from the field area;

"reconnaissance" means the undertaking of preliminary petroleum activities for the purpose of acquiring geoscientific data and includes geological, geophysical, geochemical surveys and drilling of shallow boreholes for calibration;

"regulations" means regulations made under this Act;

"reservoir" means a naturally occurring accumulation of petroleum in a geological unit limited by rock characteristics, structural or stratigraphic boundaries, contact surface between petroleum and water in the formation, or a combination of these, so that all the petroleum comprised in the geological unit is in pressure communication through liquid or gas;

"transportation" means the movement of petroleum from the wellhead to the delivery point;

"waste" includes any matter prescribed to be waste and any matter whether liquid, solid, gaseous or radioactive which is discharged, emitted or released to the environment in such a volume, composition or manner as to cause an alteration of the environment; and

"well" means a borehole obtained by the perforation of the earth's surface using conventional drilling either in a vertical, inclined or horizontal configuration, and drilled with the aim of making a discovery, an appraisal or production of petroleum.

(2) In this Act, a reference to a year of the term of a licence is a reference to a period of one year commencing on the date from and including the date on which the licence has effect and on any anniversary of that date.

3. Compliance with environmental principles.

(1) A licensee and any other person who exercises or performs functions, duties or powers under this Act in relation to petroleum activities shall comply with environmental principles and safeguards prescribed by the National Environment Management Act and other applicable laws.

(2) A licensee shall ensure that the management of production, transportation, storage, treatment and disposal of waste arising out of petroleum activities is carried out in accordance with environmental principles and safeguards prescribed under the National Environment Management Act and other applicable laws.

(3) A licensee shall contract a separate entity to manage the transportation, storage, treatment or disposal of waste arising out of petroleum activities.

(4) For the avoidance of doubt, the licensee shall remain responsible for the activities of the entity referred to under subsection (3).

(5) The National Environment Management Authority in consultation with the Authority, may grant a licence for the management, transportation, storage, treatment or disposal of waste arising out of petroleum activities to an entity contracted by a licensee under subsection (3) on terms and conditions prescribed in the licence.

(6) A person contracted by the licensee under subsection (3) shall not carry out those activities without a licence issued by the NEMA.

(7) A person who carries on the management of the production, transportation, storage, treatment or disposal of waste arising out of petroleum activities without a licence or fails to comply with the terms and conditions prescribed in the licence issued under subsection (5) commits an offence and is liable on conviction to a fine not exceeding 100,000 currency points or imprisonment not exceeding 10 years or both.

(8) NEMA shall make regulations for the management of the production, transportation, storage, treatment and disposal of waste arising out of petroleum activities.

(9) Without prejudice to the general effect of subsection (8), regulations made under this section shall prescribe, in respect of the contravention of the regulations, penalties not exceeding a fine of 5,000 currency points or imprisonment not exceeding 10 years or both; and may prescribe that the court that convicts the person shall order the forfeiture of anything used in the commission of the offence.

(10) Regulations made under subsection (8) shall be laid before Parliament.

PART II
PETROLEUM RIGHTS.

4. Vesting of petroleum rights.

(1) In accordance with article 244 of the Constitution, the entire property in, and the control of, petroleum in its natural condition in, on or under any land or waters in Uganda is vested in the Government on behalf of the Republic of Uganda.

(2) For the avoidance of doubt, the Government of Uganda shall hold petroleum rights on behalf of and for the benefit of the people of Uganda.

5. Prohibition of petroleum activities without authorisation.

(1) Petroleum activities under Ugandan jurisdiction shall not be conducted without an authorisation, licence, permit or approval in accordance with this Act.

(2) A person who contravenes subsection (1) commits an offence and is liable on conviction—

(a) if an individual, to a fine not exceeding 100,000 currency points or imprisonment not exceeding 10 years or both; and

(b) if a body corporate, to a fine not exceeding one million currency points.

6. Agreements with Government.

(1) The Government may enter into an agreement relating to petroleum activities and consistent with this Act, with any person with respect to the following matters—

(a) the grant of a licence;

(b) the conditions for granting or renewing a licence;

(d) any other matter incidental or connected to the matters in paragraphs (a), (b) and (c).

(2) The Minister shall develop or cause to be developed a model Production Sharing Agreement or any other model agreement as may be entered into by Government under this section which shall be submitted to Cabinet for approval.

(3) The Minister shall lay before Parliament the model Production Sharing Agreement or any other model agreement approved by Cabinet under subsection (2).

(4) A model agreement approved by Cabinet shall guide negotiations of any future agreements under this section.

7. Graticulation of the earth's surface.

For the purposes of this Act, the surface of the earth shall be deemed to be divided into graticular sections or blocks in the manner set out in Schedule 3.

PART III
INSTITUTIONAL ARRANGEMENTS.

The Minister.

8. Functions of the Minister.

The Minister shall be responsible for—

(a) granting and revoking licences;

(b) initiating, developing and implementing oil and gas policy;

(d) issuing petroleum regulations;

(e) negotiating and endorsing petroleum agreements;

(f) approving field development plans;

(g) promoting and sustaining transparency in the petroleum sector;

(h) approving data management systems; and

(i) any other function incidental or consequential to his or her functions.

The Petroleum Authority of Uganda.

9. Establishment of the Authority.

(1) There is established the Petroleum Authority of Uganda.

(2) The Authority shall be a body corporate with perpetual succession and an official seal and may, for the discharge of its functions under this Act—

(a) acquire, hold and dispose of movable and immovable property;

(b) sue and be sued in its corporate name; and

10. Functions of the Authority.

(1) The function of the Authority is to monitor and regulate exploration, development and production of petroleum in Uganda.

(2) Without limiting the generality of subsection (1), the Authority shall—

(a) monitor and regulate petroleum activities including reserve estimation and measurement of the produced oil and gas;

(b) review and approve any proposed exploration activity contained in the annual work programme, appraisal programme and production forecasts submitted by a licensee;

(d) assess field development plans and make recommendations to the Minister for approval, amendment or rejection of the plans;

(e) advise the Minister in the negotiation of petroleum agreements and in the granting and revocation of licences;

(f) assess tail-end production and cessation of petroleum activities and decommissioning;

(g) participate in the measurement of petroleum to allow for estimation and assessment of royalty and profit oil or gas due to the State and be responsible for the approval of the exercise;

(h) ascertain the cost oil or gas due to licensees;

(i) ensure that licensees uphold laws, regulations, rules and contract terms;

(j) administer petroleum agreements;

(k) ensure optimal levels of recovery of petroleum resources;

(l) promote well planned, executed and cost-efficient operations;

(m) ensure optimal utilisation of existing and planned facilities;

(n) ensure the establishment of a central database of persons involved in petroleum activities, manage petroleum data and provide periodic updates and publication of the status of petroleum activities;

(o) take such action as is necessary to enforce the requirements in a licence or any regulations and to protect the health and safety of workers and the public;

(p) ensure and facilitate competition, access and utilisation of facilities by third parties;

(q) monitor conditions of operators and their trade practices to ensure that competition and fair practice is maintained;

(r) provide information to the relevant authority for the collection of taxes and fees from petroleum activities;

(s) ensure compliance by the licensees with this Act and regulations made under the Act; and

(t) perform any other function incidental or consequential to its functions under this Act.

(3) The Authority shall, to the greatest extent possible and consistent with this Act, consult and cooperate with ministries, departments and agencies of Government having duties, aims or functions related to those of the Authority.

11. Conduct of functions of the Authority.

(1) The Authority shall perform its functions and exercise its powers in a manner that—

(a) is open and objective;

(b) is fair and reasonable;

(d) promotes fair competition.

(2) Notwithstanding the general effect of subsection (1), the Authority shall, in the performance of its functions—

(a) promote efficiency, economy and safety on the part of licensees and the efficient and safe conduct of petroleum activities;

(b) ensure that licensees carry out the petroleum activities which they are licensed to perform;

(d) ensure transparency in relation to the activities of the petroleum sector and the Authority; and

(e) ensure a fair balance of the interests of the Government and other participants in the petroleum sector.

12. Seal of the Authority.

(1) The official seal of the Authority shall be in a form determined by the Board.

(2) The official seal shall, when affixed to any document, be authenticated by the signatures of the Chairperson and the Secretary of the Board.

(3) In the absence of the Chairperson, the person performing the functions of the Chairperson shall sign.

(4) An instrument or contract which if executed or entered into by a person other than a body corporate would not require to be under seal may be executed or entered into on behalf of the Board by the Chairperson, or by any member of the Board or any other person if that member or other person has been duly authorised by resolution of the Board to execute or enter into the instrument or contract as the case may be.

(5) Every document purporting to be an instrument or contract executed or issued by or on behalf of the Board in accordance with this section shall be deemed to be so executed or issued until the contrary is proved.

13. Directions by the Minister.

(1) The Minister may give directions in writing to the Authority with respect to the policy to be observed and implemented by the Authority.

(2) The Minister shall cause a copy of any directions given to the Authority under subsection (1) to be published in the Gazette.

14. Independence of the Authority.

The Authority shall, subject to section 13(1), be independent in the performance of its functions, duties and the exercise of its powers.

15. Directions by the Authority.

The Authority shall, by notice in writing served on a licensee, give to the licensee directions consistent with applicable law and best petroleum industry practices to ensure proper and optimal production of petroleum and to encourage best conservation practices in licensed areas.

16. Compliance with directions.

(1) Where a licensee fails or neglects to comply with directions within the time stipulated in a notice issued under section 15, the Authority may cause to be done all or any of the things required by the direction to be done.

(2) The costs and expenses incurred under subsection (1) are a debt due to the Government and may be recovered in a court of competent jurisdiction, notwithstanding that the licensee may have been convicted of an offence under this Act.

Board of Directors of the Authority.

17. Board of Directors.

(1) The Authority shall have a Board of Directors, which shall be the governing body of the Authority.

(2) The Board of Directors shall consist of seven members of high moral character, proven integrity and competence appointed by the President with the approval of Parliament.

(3) At least three members of the Board shall be women.

(4) The President shall designate as chairperson of the Board, one of the members who is qualified and experienced in the petroleum industry, disciplines of geosciences, engineering, economics, finance or law.

(5) The other members of the Board shall have proven experience in any of the following—

(a) petroleum geosciences or engineering;

(b) health, safety and environment matters;

(d) business administration or management;

(e) finance or economics; or

(f) chemical and process or refinery engineering.

(6) The Executive Director shall be the Secretary to the Board.

18. Disqualification for appointment to the Board.

A person shall not be appointed to the Board who—

(a) is a shareholder of any entity operating in or providing services to the petroleum sector, a member of the board or an employee of a licensee;

(b) has been convicted of an offence under this Act or of an offence involving dishonesty or fraud by a competent court in Uganda or outside Uganda;

(c) has been convicted of an offence and sentenced to a term of imprisonment for six months or more by a competent court in Uganda or outside Uganda without the option of a fine; or

(d) is an undischarged bankrupt or has made any assignment or arrangement with his or her creditors.

19. Tenure of office of Board members.

A member of the Board shall hold office for four years and is eligible for reappointment for only one more term.

20. Termination of appointment.

(1) A member of the Board may, at any time, resign his or her office by 30 days notice in writing delivered to the President.

(2) The President may remove a member of the Board—

(a) if information relating to the conduct of a member, which could have precluded his or her appointment if it had been made available to the President, is brought to the attention of the President;

(b) for incompetence;

(d) for failure to disclose, at a Board meeting, a matter in which he or she has an interest;

(e) for inability to perform the functions of his or her office arising from infirmity of body or mind;

(f) who has been convicted of an offence and sentenced to imprisonment for six months or more by a competent court in Uganda or outside Uganda;

(g) for bankruptcy or insolvency; or

(h) for absence, without prior permission of the Chairperson, or without reasonable cause to the satisfaction of the President, for more than four consecutive meetings of the Board, or absence from Uganda for more than 12 months.

(3) Where it appears to the President that there is cause to remove a member under subsection (2), the President shall notify the member concerned in writing and shall give the member an opportunity to submit his or her explanation to the President.

(4) A person removed under this section is not entitled to any benefits that may be payable to him or her under section 21.

21. Remuneration of Board members.

The Chairperson and members of the Board shall be paid such remuneration as the President may, with the approval of Cabinet, specify in the instrument of appointment.

22. Filling of vacancies on the Board.

(1) Where a member of the Board resigns, dies, is removed from office or is for any other reason unable to act as a member of the Board, the Chairperson shall notify the President of the vacancy within one month after the occurrence of the vacancy.

(2) The President shall, after being notified of the vacancy under subsection (1), in accordance with section 17, appoint another person to hold office for the remainder of the term of the previous member.

(3) Where the member of the Board referred to in subsection (1) is the Chairperson of the Board, the secretary to the Board shall notify the President of the vacancy and the President shall appoint one of the Board members to hold the office of Chairperson for the unexpired portion of the Chairperson s term of office.

23. Meetings of the Board.

Schedule 2 has effect in relation to meetings of the Board and other matters provided for in that Schedule.

24. Committees of the Board.

(1) The Board may appoint committees of the Board—

(a) to inquire into and advise the Board on any matter concerning the functions of the Board as it may refer to the committee; and

(b) to exercise such powers or perform such functions of the Board as the Board may delegate or refer to the committee.

(2) A committee appointed under subsection (1) shall consist of a chairperson who shall be a member of the Board and other members of the committee as the Board may determine whether members of the Board or not.

(3) The Board shall, in writing, specify the terms and conditions of service of the members of a committee appointed under this section.

(4) Members of a committee appointed under this section shall be paid such allowances as the Board may determine.

(5) The Board may require a committee appointed under this section to act jointly or in cooperation with any other committee.

(6) Subject to any direction given by the Board, a committee appointed under this section may regulate its own procedure.

25. Functions of the Board.

(1) The Board is responsible for the general direction and supervision of the Authority.

(2) Without prejudice to the generality of subsection (1), the Board shall—

(a) oversee the operations of the Authority;

(b) advise the Minister on petroleum related policy and strategic issues;

(d) establish and approve rules and procedures for appointment, promotion, termination, discipline, and terms and conditions of service of the staff of the Authority;

(e) provide guidance to the Executive Director and staff of the Authority; and

(f) perform any other function conferred by this Act or which may be necessary for the proper implementation of this Act.

26. Delegation of functions of the Board.

(1) The Board may, by instrument of delegation, delegate to the Chairperson, a member of the Board, an officer of the Authority or to a committee established under section 24, any of the powers, duties or functions of the Board under this Act.

(2) The terms and conditions regulating the exercise of the powers delegated under this section shall be contained in the instrument of delegation.

(3) A person aggrieved by the decision of a person to whom functions and powers have been delegated under this section may appeal to the Board.

(4) A person shall, in the exercise of a delegated power under this section, comply with any directions or guidelines as the Board may, from time to time, communicate in writing.

Staff of the Authority.

27. Executive Director.

(1) The Authority shall have an Executive Director who shall be appointed by the Minister on the recommendation of the Board, on terms and conditions specified in his or her instrument of appointment.

(2) The Executive Director shall be the accounting and chief executive officer of the Authority and a full time employee of the Authority.

(3) The Executive Director shall be a person of high moral character and proven integrity, and who has qualifications and experience in petroleum geosciences, petroleum engineering, petroleum management, petroleum law or petroleum taxation and finance.

(4) A person shall not be appointed Executive Director who—

(a) is a shareholder of any entity operating in, or providing services to the petroleum sector, a member of the board or an employee of a licensee;

(b) is an undischarged bankrupt;

(c) has been convicted of an offence under this Act or an offence involving fraud or dishonesty by a competent court in Uganda or elsewhere;

(d) has been convicted of an offence and sentenced to imprisonment of six months or more by a competent court in Uganda or elsewhere; or

(e) is a public officer, a Member of Parliament, a Minister or a member of a local government council.

(5) Where a person referred to in subsection (4)(e) is to be appointed the Executive Director, the person shall resign his or her office before assuming the office of the Executive Director.

28. Functions of Executive Director.

(1) Subject to this Act and to the general supervision and control of the Board, the Executive Director shall—

(a) initiate and implement the policies and programmes of the Authority and report on them to the Board and ensure that the agreed objectives, targets and service standards are met;

(b) be responsible for the proper management of the property of the Authority;

(d) develop and oversee an operating plan to guide the Authority in performing its functions;

(e) cooperate with lead agencies and organisations in matters related to the petroleum sector;

(f) develop an economic, efficient and cost effective internal management structure;

(g) provide advice as required on all matters which fall within the area of the Authority's responsibility; and

(h) perform any other duty necessary for the implementation of this Act as may be assigned to him or her by the Board.

(2) The Executive Director is, in the performance of his or her functions, answerable to the Board.

29. Tenure of office of Executive Director.

(1) The Executive Director shall hold office for five years and is eligible for re-appointment for one more term.

(2) The Executive Director shall cease to hold office if—

(a) he or she resigns;

(b) he or she is declared or becomes bankrupt or insolvent or has made an arrangement with his or her creditors; or

(c) he or she has been convicted of an offence and sentenced to a term of imprisonment for six months or more by a competent court in Uganda or outside Uganda without the option of a fine.

(3) The Executive Director may be removed from office for—

(a) abuse of office;

(b) inability to perform the functions of his or her office arising from infirmity of body or mind;

(d) incompetence.

30. Other officers and staff of the Authority.

(1) There shall be officers and staff of the Authority as may be necessary for the effective performance of the functions of the Authority.

(2) The officers and staff shall be appointed by the Board on the advice of the Executive Director.

(3) The officers and staff of the Authority appointed under this section shall hold office on such terms and conditions as the Board may determine and specify in their instruments of appointment.

31. Protection from liability of members of Board and officers of Authority.

A member of the Board or an officer of the Authority or a person acting on the directions of the Board or of an officer of the Authority is not personally liable for any act or omission done or omitted to be done in good faith in the exercise of functions under this Act.

32. Duty not to disclose information.

(1) Subject to this Act and the Access to Information Act a person who is a member of the Board or a member of staff of the Authority shall not disclose any information, which he or she may have obtained in the course of his or her employment.

(2) A person who ceases to be a member of the Board or a member of staff of the Authority shall not disclose any information, which he or she may have obtained in the course of his or her employment for a period of 10 years.

(3) A person who contravenes subsection (1) or (2) commits an offence and is liable on conviction to a fine not exceeding 100 currency points or imprisonment not exceeding four years or both.

Finances of the Authority.

33. Funds of the Authority.

The funds of the Authority shall consist of—

(a) monies appropriated by Parliament for the purposes of the Authority;

(b) any revenue derived fr

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