The new Petroleum Operations Regulations (“POR”), approved by the Council of Ministers through Decree No. 34/2015, of 31 December 2015, have just been published in the Official Gazette and came into force on 1 January 2016. The former POR, which had been approved by means of Decree No. 24/2004, of 20 August 2004, have thus been revoked.
Following the enactment of the 2014 Petroleum Law (Law No. 21/2014, 18 August 2014), the new POR address in more detail a number of matters concerning petroleum activities and will apply to petroleum operations and any facilities held by concessionaires or third parties used in connection therewith. Amongst the most salient aspects of the regime established by the new POR, the following deserve attention in light of their potential practical significance for operations:
i. A number of specific approvals and authorizations concerning petroleum operations are expressly entrusted to the Minister responsible for the petroleum sector;
ii. Within the rules concerning public tenders for concessions, there is a list of the cases in respect of which simultaneous negotiation or direct negotiation may take place;
iii. Inclusion of detailed contents lists specifying the matters to be treated under each type of concession contract, i.e. (a) reconnaissance; (b) exploration and production; (c) construction and operation of oil or gas pipeline systems; and (d) construction and operation of facilities;
iv. While assignment / transfer of rights by members of the concessionaire is generally subject to the approval of the Minister responsible for the petroleum sector, certain exceptions are provided for in respect of specific cases involving breach of contracts;
v. The posting of a bond as security for obligations taken up under the concession contract is mandatory, in the form of either a bank or a corporate guarantee;
vi. Payment of fees, ranging from approximately USD 2,400 (MZN 125,000) to USD 30,000 (MZN 2,000,000), is provided for in relation to various applications to governmental authorities, specifically in respect of granting of rights, renewals of contracts, extension of exploration periods, development plans, commissioning of facilities and demobilization plans;
vii. The maximum duration of the production period is set at 30 years from the approval of the development plan;
viii. Provision is made in relation to the extension, renewal, relinquishment and termination of concession contracts and their respective rights, periods and areas;
ix. Requirements for appointment of operators and the obligations of operators are set forth;
x. Very detailed provisions are included in respect of the various plans necessary for the conduct of petroleum operations, specifically exploration program, development and production plan, development plan for oil and gas pipeline systems, development plan for facilities, and demobilization plan (and respective fund);
xi. A general rule on joint and several liability of the concessionaires in a concession contract is established, with certain specified exceptions (income tax or any tax on profits or net income, some confidentiality matters, and compliance with foreign exchange rules);
xii. Various local content obligations are included, notably as to training and employment of Mozambican nationals and social projects;
xiii. Procurement of goods and services for petroleum operations in an amount equal to or in excess of roughly USD 780,000 (MZN 40,000,000) must be carried out by means of a tender;
xiv. The obligation of association with Mozambican legal and natural persons, set forth in the Petroleum Law, for purposes of provision of services to petroleum operations is further detailed in terms of an obligation of result, where the end result is a substantial contribution to the production or creation of value to goods and services that are of Mozambican origin or generated by Mozambican persons;
xv. Procedures for calculating tariffs for third party access to facilities are established;
xvi. Various provisions on oil and gas pipelines systems are included, covering matters such as project design, safety issues, route selection, installation and commissioning;
xvii. Terms and conditions, including volumes and indicative prices, for the sale of gas to the domestic market by concessionaires o ENH will be set by the Ministry responsible for the petroleum sector;
xviii. Environmental and safety rules and procedures, and compliance therewith, as well as emergency and contingency measures, are also provided for;
xix. Inspections concerning petroleum operations, and fines for breaches of legislation, regulations and administrative acts, are regulated, with the range of fines potentially applicable being between approximately USD 9,500 USD (MZN 500,000) and USD 950,000 (MZN 50,000,000).
If you require a copy and/or and English translation of the new POR and/or have any queries in respect of the same, please reach out to us via the contact details set out below.
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