CHAPTER 61:02
PETROLEUM (EXPLORATION AND PRODUCTION)

ARRANGEMENT OF SECTIONS

   SECTION

PART I
PRELIMINARY

   1.   Short title

   2.   Vesting of petroleum, etc.

   3.   Interpretation

   4.   Service of documents

PART II
ADMINISTRATION

   5.   Commissioner for Petroleum Exploration and Production

   6.   Performance of Commissioner’s functions, etc.

   7.   Information not to be disclosed

   8.   Public officers holding certain shares to notify Minister

   9.   Indemnity of public officers

PART III
LICENCES

Division 1—General

   10.   Agreements with respect to the grant licences

   11.   Applications

   12.   Power of Minister to obtain information concerning applications, etc.

   13.   Restriction on persons to whom licence may be granted

   14.   Form of licence

   15.   Restriction on exercise of rights by holder of licence

Division 2—Petroleum Exploration Licence

   16.   Disposal of application for petroleum exploration licence

   17.   Content of petroleum exploration licence

   18.   Rights conferred by petroleum exploration licence

   19.   Application for renewal of petroleum exploration licence

   20.   Grant or refusal of renewal of petroleum exploration licence

   21.   Term of petroleum exploration licence

   22.   Duties of licensee

   23.   Relinquishment of part of exploration area

Division 3—Discovery of Petroleum

   24.   Discovery of petroleum to be notified

   25.   Discovery of petroleum of potential commercial interest

   26.   Investigations

Division 4—Petroleum Production Licence

   27.   Application for petroleum production licence

   28.   Disposal of application for petroleum production licence

   29.   Restriction on grant of petroleum production licence

   30.   Content of petroleum production licence

   31.   Rights conferred by petroleum production licence

   32.   Application for renewal of petroleum production licence

   33.   Grant or refusal of renewal of petroleum production licence

   34.   Term of petroleum production licence

Division 5—Miscellaneous

   35.   Directions

   36.   Compliance with directions

   37.   Unit development

   38.   Directions as to recovery of petroleum

   39.   Penalty for late payments

   40.   Information to be furnished, etc.

Division 6—Cancellation and force majeure

   41.   Cancellation

   42.   Force majeure

PART IV
FINANCIAL

   43.   Royalty on petroleum recovered under licence

   44.   Prohibition on disposal of petroleum

   45.   Remission of royalty, etc.

   46.   Security for compliance and recovery of royalty

PART V
PROTECTION OF THE ENVIRONMENT AND WORK PRACTICES

Division 1—General

   47.   Protection of natural resources to be taken into account

   48.   Work practices for holder of licence

   49.   Maintenance, etc., of property

   50.   Drilling near boundaries

   51.   Removal of property, etc., by holder of licence

   52.   Removal, disposal and sale of property

   53.   Costs and expenses of removal, disposal and sale of property

Division 2—Civil liability for pollution

   54.   Definition

   55.   Liability for petroleum pollution

   56.   Exemption from liability under section 55

   57.   Other liability not affected

   58.   Limitation

   59.   Liability for cost of preventive measures where section 55 does not apply

   60.   Saving of recourse action

   61.   Compulsory insurance against liability for pollution

   62.   Rights of third parties against insurers

PART VI
RESTRICTIONS AND SURFACE RIGHTS

   63.   Restriction on exercise of rights in relation to certain land

   64.   Right to graze stock, etc.

   65.   Compensation for disturbance of rights, etc.

   66.   Notice of intention to commence exploration or production operations

PART VII
GENERAL

   67.   Control of company not to be given without consent of Minister

   68.   Scientific investigation

   69.   Discovery of mineral to be notified

   70.   Powers of Commissioner and authorized officers

   71.   Removal of petroleum

   72.   Acquisition of land

   73.   Identity of person exercising certain rights to be established

   74.   Obstruction of licensee

   75.   Offence committed by body corporate

   76.   Miscellaneous offences

   77.   Licensee to indemnify Republic

PART VIII
REGULATIONS

   78.   Regulations

PART IX
MISCELLANEOUS

   79.   Minister to act subject to the directions of the Life President

       Schedule

         Relinquishment

INDEX TO SUBSIDIARY LEGISLATION

Under Section 78

      Petroleum (Applications) Regulations

      Petroleum (Constitution of Blocks) Regulations

      Petroleum (General Provisions) Regulations

      Petroleum (Prescribed Fees and Annual Charges) Regulations

      Petroleum (Records, Reports and Accounts) Regulations

      Petroleum (Registration and Transfer of Licences) Regulations

2 of 1983
G.N. 36/1984

An Act to make provision with respect to searching for and producing petroleum, and to provide for matters connected therewith and incidental thereto

[30TH MARCH 1983]

1.   Short title

   (1) This Act may be cited as the Petroleum (Exploration and Production) Act.

2.   Vesting of petroleum, etc.

   (1) The entire property in, and control over, petroleum in land in Malawi is vested in the Life President on behalf of the people of Malawi; but without prejudice to the exercise of any right under or pursuant to this Act.

   (2) Subject to section 68, no person shall carry on in Malawi exploration or production operations, except under, and in accordance with, a licence.

   (3) Any person who contravenes subsection (2) is guilty of an offence and liable on conviction—

   (a)   in the case of an individual, to a fine of one thousand Kwacha or to imprisonment for a term of two years, or to both; or

   (b)   in the case of a body corporate, to a fine of fifty thousand Kwacha.

3.   Interpretation

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

   “authorized officer” means a person designated as such under section 6 (2);

   “block” means a block constituted as provided in the Regulations and includes part of a block so constituted;

   “body corporate” means a company or a corporation;

   “Commissioner” means the Commissioner for Petroleum Exploration and Production appointed pursuant to section 5;

   “company” means a corporate body incorporated under the Companies Act;

   “conditions” includes terms, limitations and stipulations;

   “corporation” means a corporate body incorporated in or outside Malawi, whether by Act or otherwise, but does not include a company;

   “discovery block”, in relation to an exploration area, has the meaning assigned by section 25 (5);

   “drilling” means the perforation of the earth’s surface, otherwise than by pitting, trenching or sinking a shaft, whether the hole is vertical, inclined or horizontal, and includes all operations for preventing the collapse of the sides of the hole or preventing the hole from becoming filled by extraneous materials (including water) and the fitting of wellheads, coring and logging, and any operations incidental to the foregoing;

   “explore” means intentionally to search for petroleum and includes the evaluation of any discovery of petroleum;

   “exploration area” means the area constituted by a block that is or by the blocks that are subject to a petroleum exploration licence;

   “exploration operations” means operations carried on in the course of exploring for petroleum;

   “good oilfield practices” means all those things that are generally accepted as good, safe and efficient in the carrying on of exploration for petroleum or, as the case may be, operations for the production of petroleum;

   “holder”, in relation to a licence, means the person to whom the licence is granted and includes every person to whom the licence is lawfully assigned;

   “in default” means in breach of any provision of this Act or of any condition of a licence, or of any provision of a relevant agreement of a kind referred to in section 10;

   “land” includes land beneath water;

   “lawful occupier” in relation to customary land, includes such persons, or such class of persons, as may be prescribed;

   “licence” means a petroleum exploration licence or a petroleum production licence, or both, as the context requires;

   “licensee” means the holder of a licence;

   “monument” has the meaning assigned by the Monuments Act;

   “natural gas” means gas obtained from a well and consisting primarily of hydrocarbons;

   “petroleum” means—

   (a)   any naturally occurring hydrocarbons, whether in a 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 substance,

and includes any petroleum as defined by paragraph (a), (b) or (c) 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 exploration licence” means a licence granted under section 16;

   “petroleum production licence” means a licence granted under section 28;

   “petroleum reservoir” means a naturally occurring discrete accumulation of petroleum;

   “private land” has the meaning assigned by the Land Act;

   “production area” means the area constituted by a block that is or by the blocks that are subject to a petroleum production licence;

   “production operations” means operations carried on for or in connexion with the production of petroleum;

   “public land” has the meaning assigned by the Land Act;

   “the Regulations” means regulations made under section 78;

   “relic” has the meaning assigned by the Monuments Act;

   “this Act” includes the Regulations;

   “well” means a hole, made by drilling in connexion with exploration or production operations, but does not include a seismic shot hole.

   (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 which the licence has effect and ending on any anniversary of that date.

   (3) In this Act, a reference to the conditions of a licence is a reference to the conditions of the licence as modified from time to time.

4.   Service of documents

   (1) A document or notice required or permitted to be served on, or given to, a person under or for the purposes of this Act, may be served or given—

   (a)   in the case of an individual (other than the Minister or the Commissioner), by serving it personally upon the individual or by sending it by post to him at his usual or last known place of abode or business;

   (b)   in the case of the Minister or the Commissioner, in the manner prescribed;

   (c)   in the case of a body corporate—

      (i)   by leaving it at the registered or principal office of the body corporate with some individual apparently employed by the body corporate and apparently not less than sixteen years of age;

      (ii)   by sending it by post to the body corporate at the registered or principal office of the body corporate; or

      (iii)   by delivering it to some individual in the employment or acting on behalf of the body corporate who is authorized by the body corporate, or agrees, to accept service of or to receive the document or any document.

   (2) For the purposes of subsection (1) (c), the principal office of a body corporate incorporated outside Malawi is its principal office within Malawi.

   (3) Where a person has more than one place of abode or business a document or notice may be served on, or given to, the person under this section at any of those places.

   (4) Where a document or notice is sent by post pursuant to this section, service or notice is deemed to have been effected or given under this section, unless the contrary is proved, at the time at which the document or notice would be delivered in the ordinary course of post.

PART II
ADMINISTRATION

5.   Commissioner for Petroleum Exploration and Production

   The Minister may appoint a person to be the Commissioner for petroleum Exploration and Production, and such other persons to be officers as he may consider necessary for the administration of this Act.

6.   Performance of Commissioner’s functions, etc.

   (1) Anything required or permitted by or under this Act to be done by the Commissioner may be done by any officer who is authorized, either specially or generally, in that behalf in writing by the Commissioner, and for the purpose of doing so that officer is deemed to be the Commissioner.

   (2) The Commissioner may designate any public officer to be an authorized officer for the purposes of this Act.

7.   Information not to be disclosed

   (1) Subject to subsection (2), information furnished, and information in a report submitted, pursuant to the Regulations by a licensee shall not, for as long as the licence has effect, be disclosed, except with the consent of the licensee.

   (2) Nothing in subsection (1) operates to prevent the disclosure of information when the disclosure is made—

   (a)   for or in connexion with the administration of this Act;

   (b)   for the purpose of any legal proceedings; or

   (c)   to any consultant to the Government, or to any public officer, who is approved by the Commissioner as a proper person to receive the information.

   (3) Any person who contravenes subsection (1) is guilty of an offence and liable on conviction to a fine of one thousand Kwacha or to imprisonment for a term of two years, or to both.

8.   Public officers holding certain shares to notify Minister

   (1) In this section, “public officer” means a public officer engaged in the administration of this Act.

   (2) Where a public officer, either directly or indirectly, holds any shares in a body corporate which is the holder of a licence, he shall, without delay, notify the Minister in writing of that fact giving in the notice particulars of the shares held by him.

   (3) For the purposes of this section, the holding by the wife or husband (not herself or himself being a public officer) of a public officer of any shares of the kind referred to in subsection (1) is deemed to be a holding by the public officer of the shares.

   (4) This section applies with respect to shares—

   (a)   acquired by the holder whether before or after the appointment to public office;

   (b)   held whether before or after the commencement of this Act.

9.   Indemnity of public officers

   A public officer does not incur any liability in respect of the exercise or performance, or purported exercise or performance, by him in good faith of any function under and for the purposes of this Act.

PART III
LICENCES

Division 1—General

10.   Agreements with respect to the grant of licences

   (1) With the consent of the Life President, the Minister, on behalf of the Republic of Malawi, may enter into an agreement (not inconsistent with this Act) with any person with respect to all or any of the following matters, namely—

   (a)   the grant to that person, or to any person (including any body corporate to be formed) identified in the agreement, of a licence on the conditions (if any) specified in the agreement;

   (b)   conditions or the conditions to be included in the licence as granted or renewed; or

   (c)   any matter incidental to or connected with the foregoing.

   (2) There may be included in an agreement under subsection (1) provision with respect to a contract of insurance or other form of security required to be kept in force under section 61.

11.   Applications

   (1) An application under this Act—

   (a)   shall be made in accordance with the Regulations;

   (b)   shall be made in or to the effect of a form approved by the Minister;

   (c)   shall be made to the Minister or, if it is so provided in the Regulations, to the Commissioner; and

   (d)   may be withdrawn by the applicant giving to the Minister or, in the case of an application made to the Commissioner, to the Commissioner a notice of withdrawal.

   (2) An application shall be accompanied by the fee (if any) prescribed in respect of the application.

   (3) The Minister shall, by written notice served on an applicant for the grant of a licence, require the applicant to do either or both of the following, namely—

   (a)   publish details of his application at a time or times, and in a manner, specified in the notice;

   (b)   give details of his application to the persons, and in a manner, specified in the notice.

   (4) The Minister shall cause an applicant for the grant or renewal of a licence to be notified in writing of his decision on the application giving, where he is prepared to grant or renew the licence, details of the conditions on which it will be granted or renewed—

   (a)   and if the applicant notifies the Minister, in writing, within sixty days (or such further period as the Minister may allow) of being so notified, that he accepts those conditions, the licence shall be issued on those conditions;

   (b)   but if the applicant fails so to notify the Minister, the application lapses.

12.   Power of Minister to obtain information concerning applications, etc.

   (1) The Minister may, by written notice served on the applicant for the grant of a licence, require the applicant to furnish him, within such reasonable time as is specified in the notice—

   (a)   with such further information relevant to the application as may be described in the notice; and

   (b)   if the applicant, or any of the applicants, is a body corporate, with such information as may be described in the notice to enable him to ascertain to what extent the controlling power in the direction of the affairs of the body corporate is a corporation incorporated outside Malawi, or an individual or individuals resident outside Malawi.

   (2) To enable him to dispose of an application for the grant of a licence, the Minister—

   (a)   may cause such investigations, negotiations or consultations to be carried on as he considers necessary; and

   (b)   may, by written notice served on the applicant for the grant of the licence, require the applicant to furnish him, within such reasonable time as is specified in the notice, with such proposals, by way of alteration to or in addition to any proposals in the application, as the Minister specifies in the notice.

13.   Restriction on persons to whom licence may be granted

   No licence—

   (a)   shall be granted to an individual unless he is a citizen of Malawi or has been ordinarily resident in Malawi during the period of four years immediately preceding the date on which his application for the grant of a licence is made;

   (b)   being a petroleum exploration licence, shall be granted to a body corporate unless the body corporate is—

      (i)   a company;

      (ii)   a corporation incorporated in Malawi; or

      (iii)   a corporation (not being a corporation of a kind referred to in subparagraph (ii)) approved by the Minister; or

   (c)   being a petroleum production licence, shall be granted to a body corporate unless the body corporate is—

      (i)   a company; or

      (ii)   a corporation incorporated in Malawi.

14.   Form of licence

   A licence shall be in accordance with such form as the Minister approves.

15.   Restriction on exercise of rights by holder of licence

   When the doing of any act is prohibited or regulated by a written law (other than this Act), nothing in this Act shall be construed,—

   (a)   where the doing of the act is so prohibited, as authorizing a licensee to do the act; or

   (b)   where the doing of the act is so regulated, as authorizing a licensee to do the act—

      (i)   otherwise than in accordance with the written law and any authority referred to in subparagraph (ii); and

      (ii)   without first obtaining any authority (howsoever described) required under the written law for the doing of the act.

Division 2—Petroleum Exploration Licence

16.   Disposal of application for petroleum exploration licence

   (1) Subject to the provisions of this Act, on application in writing duly made, the Minister may grant on such conditions as he may determine, or refuse to grant, a petroleum exploration licence in respect of any block or blocks.

   (2) A petroleum exploration licence shall not be granted in respect of a block which is, at the time the application for the grant of the licence is made, comprised in a licence already granted.

17.   Content of petroleum exploration licence

   (1) A petroleum exploration licence—

   (a)   shall—

      (i)   state the date of the grant of the licence;

      (ii)   identify the block or blocks to which the licence relates; and

      (iii)   state the conditions on which the licence is granted; and

   (b)   may contain such other matter as the Minister may determine for the purposes of subsection (2) or (3) or otherwise.

   (2) There may be included in a petroleum exploration licence provision with respect to the exercise by the Republic, or a person identified in the licence, of an option to acquire on stipulated terms, or on terms to be agreed, an interest in any venture for the production of petroleum which may be carried on in any block or blocks to which the licence relates when granted.

   (3) Where the Minister is satisfied that an initial period is required to make the necessary preparations to carry on exploration operations, he may specify in a petroleum exploration licence a period (not exceeding one year) as the preparation period.

18.   Rights conferred by petroleum exploration licence

   A petroleum exploration licence, while it remains in force, confers on the licensee, subject to this Act and to the conditions specified in the licence or to which the licence is otherwise subject, the exclusive right to explore for petroleum, and to carry on such operations and execute such works as are necessary for that purpose, in the exploration area.

19.   Application for renewal of petroleum licence

   Subject to this Act, a licensee may apply for the renewal of a petroleum exploration licence in accordance with the Regulations.

20.   Grant or refusal of renewal of petroleum exploration licence

   (1) Subject to subsection (2), on application duly made pursuant to section 19 for the renewal of a petroleum exploration licence, the Minister shall grant a renewal of the licence on such conditions as are reasonably necessary to give effect to the application and the requirements of this Act.

   (2) Subject to subsection (3), the Minister shall refuse to grant a renewal of a petroleum exploration licence if the licensee is in default unless the Minister considers that special circumstances exist which justify the granting of the renewal notwithstanding the default.

   (3) The Minister shall not refuse to grant the renewal of a petroleum exploration licence on application being duly made under section 19 unless—

   (a)   he has given to the applicant written notice of his intention to do so—

      (i)   giving in the notice particulars of the ground for the intended refusal; and

      (ii)   stating in the notice a date before which the applicant may take appropriate action or make representations in relation to that ground; and

   (b)   the applicant has not, before that date, remedied the default or, in a written notice given to the Minister, made representations which, in the opinion of the Minister, remove the ground for the intended refusal.

21.   Term of petroleum exploration licence

   (1) A petroleum exploration licence, unless sooner determined, shall, by virtue of this subsection continue in force—

   (a)   for any preparation period specified in the licence pursuant to section 17 (3);

   (b)   for the period stipulated in the licence, not exceeding four years, next after the date of the grant of the licence or, if there is a preparation period, next after the expiration of that period;

   (c)   for the renewal period, not exceeding three years, following the date upon which any renewal of the licence is granted pursuant to section 20; and

   (d)   for any period added pursuant to section 42 (3) to the term of the licence.

   (2) Where a petroleum exploration licence would otherwise cease to be in force then, by virtue of this subsection, the licence shall, unless sooner determined, continue in force in respect of any block subject to the licence to which an application, duly made, for the grant of—

   (a)   a renewal of the licence; or

   (b)   a petroleum production licence,relates, until—

   (c)   the application is finally dealt with—

      (i)   by the renewal of or refusal to renew the licence; or

      (ii)   as the case may be, by the grant of or refusal to grant the petroleum production licence; or

   (d)   the application lapses.

   (3) Where a petroleum exploration licence would otherwise cease to be in force then, by virtue of this subsection, the licence shall, unless sooner determined, continue in force in respect of any discovery block or blocks in the exploration area until a notice is given pursuant to section 25 (1), or until the lapse of the period of thirty days referred to in section 25 (1), whichever first occurs.

   (4) Where a notice given pursuant to section 25 (1) states that a discovery is, in the opinion of the licensee, of potential commercial interest and the petroleum exploration licence relating to the discovery would otherwise cease to be in force then, by virtue of this subsection, the licence shall, unless sooner determined, continue in force in respect of the discovery block or blocks in the exploration area—

   (a)   for the period specified in section 25 (2); and

   (b)   for any extension of that period allowed by the Minister pursuant to section 25 (3).

22.   Duties of licensee

   (1) Subject to subsections (3) and (4), a licensee shall in, or in relation to, the exploration area, meet the requirements, with respect to work and expenditure,—

   (a)   stipulated in the licence; and

   (b)   of each programme submitted pursuant to subsection (2).

   (2) A licensee shall, not later than one month before the anniversary in any year of the grant of a petroleum exploration licence, submit to the Minister in detail an adequate programme with respect to work and expenditure to be carried out or made in the year of the term of the licence immediately following the anniversary concerned.

   (3) The Minister may, on application made to him in writing by a licensee, by instrument in writing limit, reduce, vary or suspend any obligation arising pursuant to subsection (1), either conditionally or unconditionally.

   (4) A licensee may, for good cause, amend the details of any programme of work and expenditure which he is required under subsection (1) to carry out, but—

   (a)   the licensee shall forthwith give notice in writing to the Minister of any such amendment, giving in the notice details of and the reason for the amendment; and

   (b)   no such amendment shall have effect so as to reduce the minimum requirements of the overall programme of work and expenditure to be carried out or made in the term of the licence.

   (5) Where a licensee fails to carry out any part of the work programme stipulated in his petroleum exploration licence, or in a work programme submitted pursuant to subsection (2), then without prejudice to any other right which may be invoked in respect of that failure the relevant provisions of the licence (if any) apply for the purpose of determining the liquidated damages payable to the Republic.

   (6) The requirement in subsection (2) with respect to an adequate programme with respect to work and expenditure is deemed to have been met in any case where the programme submitted pursuant to that subsection satisfies the requirements (if any) with respect to work and expenditure contained in a relevant agreement of a kind referred to in section 10.

23.   Relinquishment of part of exploration area

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