Petroleum Legislation

Legislative Environment

The SADR Petroluem and Mining Authority will use a Production Sharing Contract regime to govern petroleum operations within their territorial boundaries. There are two legislative documents concerning petroleum industry operations within the SADR, the Production Sharing Contract (PSC) and the Production Sharing Contract Assurance Agreement (AA).

Production Sharing Contract

The SADR will issue prospective licencees with a model Production Sharing Contract based on international best practice. In line with the agreed PSCs the following general provisions should be noted and adhered to:

    • No petroleum activity may be undertaken in the SADR except pursuant to, and in accordance with the Petroleum Regulations
    • All acreage in the SADR is held on behalf of the State by the Petroleum and Mining Authority
    • The contractor shall have the exclusive right to search for and produce the oil and gas, and the right to carry out exploration and development either directly or through an agent

Production Sharing Contract Assurance Agreement

The PSC Assurance Agreement clarifies certain conditions subsequent relating to the sovereignty and the introduction of enabling legislation that must be satisfied before the firat exploration period can commence. It also stipulates a schedule of administrative fees, term of agreement, taxation regime and governing law in the intervening period leading up to the commencement of the first exploration period.

For more information please contact us.