PROPOSED PETROLEUM REGULATIONS FOR THE SOLOMON ISLANDS
United Nations Center on Transnational Corporations (UNCTC) J.A. Rodd and W. Barclay'
May 1993 SOPAC Technical Report 170
SOPAC Technical Secretariat
Prepared for: South Pacific Applied Geoscience Commission (SOPAC Hydrocarbon Program: Regional Project 93.RG.21e
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TABLE OF CONTENTS
Page
ACKNOWLEDGEMENTS ...................................................................................................... 4 SUMMARY................................................................................................................................ 5
OBJECTIVES........................................................................................................................ 6
INTRODUCTION....................................................................................................................... 6
COMMENTS AND CORRECTIONS TO THE
....................................................................... PROPOSED PETROLEUM REGULATIONS 7
PROPOSALS FOR FURTHER DEVELOPMENT OF
PETROLEUM LEGISLATION ............................................................................. 12
CONCLUSIONS AND RECOMMENDATIONS ................................................................. 15
REFERENCES.................................................................................................................................. 16
APPENDIX
PROPOSED PETROLEUM REGULATIONS .................................................... 17
TABLE
Comparison of application fees and rentals for SOPAC member countries ................. 14
[TR170 - UNCTC, Rodd & Barclay]
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ACKNOWLEDGEMENTS
This work was supported by the United Nations Center on Transnational Corporations
(UNCTC), the Commonwealth Fund for Technical Co-operation (CFTC), the Canadian
International Development Agency (CIDA) and the Government of Solomon Islands.
Thanks are extended to the UNCTC which cooperated closely with SOPAC throughout the
development of this work and which drafted the proposed Regulations contained herein.
[TR170 - UNCTC, Rodd & Barclay]
[5]
SUMMARY
This report presents the new proposed Petroleum Regulations for Solomon Islands
(Appendix). The proposed Regulations have been drafted by the United Nations Center on
Transnational Corporations and have been reviewed by SOPAC. The proposed Regulations
are for the most part clear, concise and comprehensive. Subject to a few minor
modifications contained herein, they are ready to be approved by Government as part of
the petroleum legislation of Solomon Islands.
The Regulations will form an important and integral part of the whole petroleum legislation.
They indicate how Government intends to interpret and apply the Petroleum Act, 1987. In
keeping with standard practise, the Regulations are broad in approach rather than
technically detailed. In this way they will not be outdated by the rapid technological
advances and changes in practise that characterise the oil industry. The Regulations will
allow the Minister to regulate licences and petroleum agreements, work obligations and
area relinquishment, the discovery and development of petroleum, the conduct of
operations, environmental protection, navigation, fishing, marine and other resources.
In order to complete the petroleum legislation, it is important to draft and approve a Model
Petroleum Agreement. This should be consistent with the Petroleum Act, 1987, and should
contain competitive licensing terms in order to attract oil companies to invest in exploration.
[TR170 - UNCTC, Rodd & Barclay]
[6]
OBJECTIVES
This work is a contribution to SOPAC 1993 Work Program project 93.RG.21e: development
of petroleum legislation in SOPAC member countries, and was carried out at the request of
the Government of Solomon Islands. The aim of the work is to coordinate the production of
new proposed Petroleum Regulations with the UNCTC and to review the proposed
regulations.
INTRODUCTION
The development of petroleum legislation in Solomon Islands has had a long history. The
original petroleum legislation was drafted by the Commonwealth Fund for Technical Co-
operation in 1981 (CFTC 1981). Following a subsequent review by the UNCTC (1984), the
Solomon Islands’ Petroleum Act was passed in 1987.
The UNCTC (1984) also provided initial drafts for Petroleum Regulations and a Model
Petroleum Agreement. Subsequently, both were revised by the UNCTC (1990) to
incorporate comments by SOPAC. However, following discussions with the Government of
Solomon Islands in 1991, the UNCTC decided to restyle the Regulations for a last time
using simpler English. This latest version of the Regulations by the UNCTC form the main
part of this report.
At the request of the Government of Solomon Islands, SOPAC has reviewed this latest
version of the Regulations. They are for the most part clear, concise and comprehensive.
Subject to the addition of the several minor corrections and modifications (see Comments
and Corrections to the Proposed Petroleum Regulations), the Regulations are now
considered suitable for ratification by Government.
[TR170 - UNCTC, Rodd & Barclay]
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COMMENTS AND CORRECTIONS TO THE
PROPOSED PETROLEUM REGULATIONS
A detailed review has been made of the proposed Petroleum Regulations paying heed to
their consistency with the Petroleum Act (1987) and in the light of what is common practice
for petroleum legislation elsewhere. As a result, it is recommended that the following
additions and modifications be made to the proposed Petroleum Regulations.
The corrections and additions to the proposed Regulations appear as underlined text in the
following text. Comments are given in capital letters and square brackets e.g.
[COMMENTS], and should not be added to the Regulations.
[IN THE LIST OF CONTENTS]
41. Stand-by vessel
PART I. GENERAL PROVISIONS
1 (2) These Regulations are made pursuant to the authority conferred by Section
41 of the Petroleum Act, 1987.
PART II. LICENCES AND PETROLEUM AGREEMENTS
3 (1) For the purpose of dividing the Solomon Islands into licence areas, the
surface of the earth shall be deemed to be divided -
(a) by the meridian of Greenwich and by meridians that are at a distance
from that meridian of six minutes of longitude or a multiple of six
minutes of longitude; and
[TR170 - UNCTC, Rodd & Barclay]
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(b) by the equator of and by parallels of latitude that are at a distance
from the equator of six minutes of latitude, or a multiple of six minutes
of latitude
into graticular sections, each constituting a "block", each of which is
bounded by portions of
(c) one of these meridians that are at distance from each other of six minutes of longitude; and
(d) one of these parallels of latitude that are at a distance from each other
of six minutes of latitude.
4 (1) (e) be accompanied by receipt evidencing payment of an application fee
of 500 US dollars
[SEE ALSO SECTION ON PROPOSALS FOR FURTHER DEVELOPMENT OF
PETROLEUM LEGISLATION FOR FURTHER COMMENTS ON APPLICATION FEES]
PART III. WORK OBLIGATIONS AND AREA RELINQUISHMENT
10 The licensee may be required to provide to the Government a bond or banker's
guarantee, acceptable to the Minister, for either part of, or for the total amount of the
expenditure obligations stipulated under Regulation 9.
PART IV. DISCOVERY AND DEVELOPMENT
14 (d) production forecasts (per well and per field):
[INSERT A NEW SUBSECTION 15(c) AND RE-LETTER ALL SUBSEQUENT
SUBSECTIONS (c) TO (g) ACCORDINGLY]
[TR170 - UNCTC, Rodd & Barclay]
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15 (c) an account of the Proposed costs of the field development
(d) an environmental impact statement describing the possible environmental
effects of the proposed development plan prepared by an approved
independent agency.
(f) where any pool extends beyond the licence area, the suggested unitization agreement in accordance with Regulation 18(1)
PART V. CONDUCT OF OPERATIONS
[INSERT A NEW SUBSECTION 23(1)(a) AND RE-LETTER ALL SUBSEQUENT
SUBSECTIONS (b) TO (h) ACCORDINGLY]
23 (1) (a) a sea bottom survey for the site of the drilling platform
(e) the geological strata that are expected to be penetrated and the target
interval or intervals;
38 (1) Detailed safety instructions including an emergency evacuation plan
shall be prepared for each drilling platform. Each employee shall be
required to sign a receipt for his individual copy of the safety
instructions.
Stand-by
Vessel 41 When circumstances so demand, the licensee shall provide for a
stand by vessel which shall be stationed at the platform during drilling
operations. The stand-by vessel shall have sufficient capacity and
equipment to take onboard and provide for the total crew of the
platform in cases of emergencies.
44 (1) Personnel and visitors on the drilling platform shall be equipped with safety
[TR170 - UNCTC, Rodd & Barclay]
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helmets, safety boots, safety belts and other safety equipment which they are obliged to use when working conditions so require.
PART VI. PROTECTION OF THE ENVIRONMENT, NAVIGATION, FISHING, AND MARINE AND OTHER RESOURCES
[INSERT A NEW SUBSECTION 67(1) AND RENUMBER THE SUBSEQUENT
SUBSECTION]
67 (1) A licensee shall prepare a Pollution Control Plan listing equipment and procedures to be used in Pollution prevention and clean up.
PART VII. RECORDS AND REPORTS
70 (a) the gross quantity of crude oil and natural gas won and saved from the
licence area as measured at the well head and at any other points of
measurement as specified by the Minister;
71 (1) On the drilling platform the licensee shall keep a daily log on a form
approved by the Minister. The log shall be made at least in triplicate. One
copy shall be supplied daily to the Minister, and one copy shall be filed at the
licensee’s office in Solomon Islands. The other copy shall at all times be
retained at the platform and be available for inspection by persons authorized
by the Minister.
(3) The daily log shall further contain information about accidents, damages,
injuries and other occurrences and other information which may be deemed
of current or future interest to the Minister.
(4) The Minister may require further information concerning the activities carried
out.
[TR170 - UNCTC, Rodd & Barclay]
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75 (a) digital tape copies of field and processed seismic and other geophysical and
navigation data;
[INSERT A NEW SUBSECTION 75(b) AND RE-LETTER ALL SUBSEQUENT
SUBSECTIONS (c) TO (o) ACCORDINGLY]
(b) interpretations and maps incorporating geological and geophysical data
acquired by the licensee.
(c) well data, including, but not limited to, electric logs and other wireline
surveys, mud-logging reports and logs, samples of cuttings and cores and
analyses made therefrom;
[TR170 - UNCTC, Rodd & Barclay]
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PROPOSALS FOR FURTHER DEVELOPMENT OF
PETROLEUM LEGISLATION
The present day approach to petroleum legislation in developing countries is for the
legislation simple, comprehensive and flexible insomuch as revisions can be made which
allow it to keep pace with rapid changes in the international oil industry. The legislation as a
whole should be comprehensive and be kept up-to-date. This is important for two reasons.
Firstly the legislation will thus provide the oil company, as an investor, with the legal
guarantee that its investment is fully protected. Secondly, it will ensure that the legal and
fiscal terms offered by the government are competitive with those offered by other
countries.
To achieve this, one of the most widely used approaches is to divide the legislation into
three components (see also Rodd & Elaisi 1993 and papers therein):
1) A Petroleum Act which sets out the broad terms and conditions by which petroleum
exploration and development is to be permitted. The Act should thus not require
repeated amendments and revisions to keep pace with the rapid pace of
international developments, but should have a long lifetime. The Petroleum Act,
1987, is a good example of this approach.
2) Petroleum Regulations which set out how Government intends to interpret and
apply the Petroleum Act in practice. Although a certain amount of detail is called for
in the rules, it is common practise for the regulations to be broad rather than
technically detailed. In this way they will not be outdated by the rapid technological
advances and changes in practise that characterise the oil industry. The Minister
and his officers are often empowered to execute much of the Regulations and the
Minister to modify them without recourse to Cabinet or Parliament. The proposed
Petroleum Regulations contained herein are consistent with this approach.
3) A Model Petroleum Agreement which sets out in detail the legal and fiscal terms
and conditions by which the government will grant concessions for the exploration
and production of petroleum. It is thus always consistent with the Act and the
Regulations. However, unlike the Act and Regulations, the terms of the Model
[TR170 - UNCTC, Rodd & Barclay]
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Petroleum Agreement (MPA) are open to negotiation with oil companies, e.g. royalty
and tax rates, licence fees, licence renewals, etc. MPAs are commonly modified for
each new licensing round or acreage offer to reflect the changing perception of
exploration risk, particularly after the discovery of commercial oil or gas, and other
international developments. The Minister is usually empowered to modify the MPA
or to introduce new MPAs. At present Solomon Islands does not have a Model
Petroleum Agreement.
The Proposed Petroleum Regulations
With the addition of the modifications suggested above, the Petroleum Regulations are now
thought to be in a fit state to be ratified by Government. They will form a necessary part of
the legislation and are consistent with the approach outlined above.
An important part of the Petroleum Regulations is the provision and definition of a
petroleum licensing area, as stated in regulations 3(2) and 3(3). A proposed petroleum
licensing area for Solomon Islands is given by Barclay (1993).
Although the UNCTC have not specified the amount of Application Fee to be paid in section
4(1)(e) of the proposed Regulations, it is recommended that the Application Fee should be
US$ 500. This is in keeping with application fees levied elsewhere in the region (see Table
1) and is therefore competitive.
It is suggested that, during periods of exploration activity, a review of these regulations
should be undertaken every 3 years to ensure that they are kept up to date with changing
technology and practises.
Model Petroleum Agreement
At present Solomon Islands does not have a ratified Model Petroleum Agreement (MPA).
This is the next and final component necessary to complete the petroleum legislation. It will
[TR170 - UNCTC, Rodd & Barclay]
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Table. Comparison of application fees and rentals for SO PAC member countries
Solomon Islands' (US$) Fiji' Papua New Guinea' Tonga2
(F$) (K) (Pa, US$)
Application fees 5003 E: 200-500 E: 2000 Pa 1000
P: 1000-2000 P: 10000
Rentals 400 000 plus E: 30-120 100 (yrs 1-6 & US$ 2445 per block
incremental for no. of per block increasing thereafter)
blocks' P: 1000-5000 per block
, Proposed terms as at May 1993
, Terms in effect July 1988
3 Application fee for Solomon Islands recommended in this report
.Rental for Solomon Islands proposed by UNCTC (1990)
Source: Havard (1993)
provide the basis for negotiation with oil companies and will make this process that much
more attractive to them. The MPA should, in essence, be consistent with the Petroleum Act
(1987) and with the proposed Petroleum Regulations contained herein. Section 31 of the
Petroleum Act (1987) clearly sets out the type of licence agreement that is to be used in
the Solomon Islands: a royalty-tax system. This system is best suited and most
advantageous to Solomon Islands because it makes government revenues relatively easy
to monitor and administer.
Although in their earlier reviews of Solomon Islands petroleum legislation, the UNCTC
proposed two rather similar MPAs (UNCTC 1984, 1990), neither are consistent with the
Petroleum Act, 1987. These MPAs propose that Government obtain its revenues principally
through royalty, production sharing and tax. This is a hybrid licencing system that is
complex, would require a large and costly administration, and is often difficult to effectively
monitor (for further background on petroleum licensing systems see Rodd & Alaisi 1993).
According to the proposed MPAs (UNCTC 1984, 1990), Government would participate in
Joint Management Committee and would thus have to contribute to, and review, the
technical work programme. This requires a considerable breadth and depth of technical
expertise which is not currently available in Government. The proposed MPAs also specify
[TR170 -UNCTC, Rodd & Barclay]
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rental fees that are far too high relative to those in use elsewhere in the region (see Table
1; Havard 1993, Rodd & van Meurs 1993). For example, rental fees are F$ 30-120 and
US$ 2445 per block in Fiji and Tonga respectively, whereas the 1990 MPA proposes a fee
of US$ 400 000 plus an incremental for the number of blocks for Solomon Islands. This is
not in keeping with the high perceived geological risk and so acts as disincentive to oil
companies.
The proposed MPAs (UNCTC 1984, 1990) are, therefore, considered inappropriate in
Solomon Islands’ case and it is strongly recommended that they are dropped. A new MPA
should be drafted which is consistent with the Petroleum Act, 1987, particularly with respect
to the royalty-tax licensing system, and should offer more competitive legal and fiscal terms,
particularly with regard to application fees and licensing fees.
CONCLUSIONS AND RECOMMENDATIONS
1) New proposed Petroleum Regulations for the Solomon Islands have been drafted by
the UNCTC and are presented in this report. The proposed Regulations are for the
most part clear, comprehensive and concise.
2) The proposed Regulations have been reviewed by SOPAC and several minor
corrections and modifications are recommended.
3) Once these changes have been incorporated, it is recommended that the
Regulations will be in a fit state to be ratified by Government to become an integral
and necessary part of Solomon Islands’ petroleum legislation.
4) In order to make the petroleum legislation comprehensive and complete, it is
important to draft and approve a Model Petroleum Agreement. Existing drafts of
Model Petroleum Agreements are considered inappropriate and inconsistent with the
Petroleum Act, 1987. It is recommended that a new Model Petroleum Agreement be
drafted which is consistent with the Act and which offers more competitive licensing
terms.
[TR170 - UNCTC, Rodd & Barclay]
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REFERENCES
Barclay, W. 1993. A petroleum licensing area and quadrant and block numbering system for the Solomon Islands. SOPAC Miscellaneous Report 152.
CFTC, 1981. Draft petroleum legislation for Solomon Islands. Commonwealth Fund for Technical Co-operation report.
Havard, K. 1993. Comparison of petroleum laws and regulations in SOPAC member countries, in Rodd, J.A. and Elaisi, A. (eds) Papers and Materials Presented at the SOPAC-OIC Hydrocarbon Legislation and Policy Workshop, Port Vila, Vanuatu 13-17 July 1992, SOPAC Miscellaneous Report 143, pages 163-168.
Rodd, J.A. & Elaisi, A. (eds) Papers and Materials Presented at the SOPAC-OIC Hydrocarbon Legislation and Policy Workshop, Port Vila, Vanuatu 13-17 July 1992, SOPAC Miscellaneous Report 143, 215 pages.
Rodd, J.A. & van Meurs, P. 1993. Economic analysis of offshore petroleum prospects for SOPAC member countries. SOPAC Technical Report 162.
UNCTC, 1984. Report to the Government of Solomon Islands on petroleum policy, law, regulations and model petroleum agreement. United Nations Center on Transnational Corporations report.
UNCTC, 1990. Report to the Government of Solomon Islands on the revision of the draft petroleum regulations and model agreement. United Nations Center on Transnational Corporations report.
[TR170 - UNCTC, Rodd & Barclay]
PETROLEUM REGULATIONS, 1993
ARRANGEMENTS OF REGULATIONS
PART I GENERAL PROVISIONS
1.
2. Application of regulations
Citation and consistency with petroleum act
PART II. LICENCES AND PETROLEUM AGREEMENTS
3. Demarcation of blocks
4.
5.
6. Bidding for licences
7. Petroleum Agreements
Application for petroleum prospecting licence
Application for petroleum development licence
PART III. WORK OBLIGATIONS AND AREA RELINQUISHMENT
8. Minimum Work Obligation
9. Expenditure Commitment
10. Performance bond
11. Relinquishment of licence area
12. Shape of relinquished areas
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PART IV. DISCOVERY AND DEVELOPMENT
13. Appraisal Programme
14. Evaluation Report
15. Commerciality and General Development Plan
PART V. CONDUCT OF OPERATIONS
16. Good Oilfield Practice
17. Work programmes
18. Ministerial directions
19. Conservation of petroleum
20. Seismic Surveys
21. Drilling approval
22. Drilling supervision
23. Drilling Programme
24.
25. Towing Drilling Platforms
26. Approval of Platform
27. Safety devices
28. Surface casing
29. Intermediate casing
30. Production casing
31. Deviated drilling
32. Discontinuance of drilling
33. Abandonment of Wells
34. Plugging of Wells
35. Removal of obstructions
36. Raising or lowering platforms
37. Visitors on platforms
Location and removal of installations
- ii -
38. Safety instructions
39. Lighting on platforms
40. Positioning of platforms
41. Stand-by vehicle
42.
43.
44. Safety wear
45. Diving operations plan
46. Condition of working areas
47. First Aid
48. Diseases
49. Fatalities
50. Electrical Installations
51. Fire Prevention
52. Firefighting equipment
53. Fire detection
54. Fire hazards
55. Explosives
56. Explosives magazines
57. Transporting explosives
58. Conditions for using explosives
59.
60. Perforating
61. Telecommunications
62. Communication system
63.
Gas detectors and explosion meters
Chemical treatment of a well
Other laws applicable to use of explosives
Vessel mooring and helicopter decks
PART VI. PROTECTION OF THE ENVIRONMENT, NAVIGATION, FISHING,
AND MARINE AND OTHER RESOURCES
- iii -
64. Conservation of living resources
65.
66. Protection of the environment
67. Pollution control
68.
69. Records to be maintained
70.
71. Daily log
72.
73. Samples
74. Cores
75. Reports
76. Periodic submission of reports
77. Oral reports
78. Access to Information
79. Export of Data
Compliance with navigation and aviation regulations
Government execution of pollution control
Accounts of crude oil and natural gas et.
Record of persons on platform
PART VII. MISCELLANEOUS
80. Inspection
81. Offenses and Penalties
82. Definitions
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PETROLEUM REGULATIONS, 1993
PART I. GENERAL PROVISIONS
Citation and consistency 1. (1) These Regulations may be cited as
with Petroleum Act the Petroleum Regulations, 1993
(2) These Regulations are made pursuant to
the authority conferred by Section 41 of the Petroleum
Act, 1984.
(3) In the event of a conflict between the
provisions of the Petroleum Act and the provisions of
these Regulations, the provisions of the Petroleum Act
shall prevail.
Application of Regulations 2. (1) These Regulations shall apply to
exploration and drilling for and production of petroleum
in Solomon Islands, including its offshore area.
(2) The Minister may, under special
circumstances, grant dispensation from the provisions of
these Regulations.
PART II. LICENCES AND PETROLEUM AGREEMENTS
Demarcation of blocks 3. (1) For the purpose of dividing the Solomon
Islands into licence areas, the surface of the earth shall
be deemed to be divided -
(a) by the meridian of Greenwich and by
meridians that are at a distance from that
meridian of five minutes of longitude or a
multiple of five minutes of longitude; and
by the equator of and by parallels of
latitude that are at a distance from the
equator of five minutes of latitude, or a
multiple of five minutes of latitude
(b)
into graticular sections, each constituting a
"block", each of which is bounded by portions of
(c) one of those meridians that are at
distance from each other of five minutes of
longitude; and
(d) one of those parallels of latitude that
are at a distance from each other of five
minutes of latitude.
(2) showing the division of Solomon Islands into blocks and
The Government shall prepare a reference map
the reference map shall be available for inspection at a
place designated by the Minister.
(3) The Minister may certify a map to be a true copy
of the reference map prepared pursuant to this regulation
and any such copy shall be received in all proceedings as
evidence of the contents of that reference map.
(4) to a numbered block, or to part of a numbered block,
shall be treated as a reference to the block, or part of a
block, so numbered on the reference map prepared
pursuant to this regulation.
A reference in a petroleum agreement or a licence
Application for 4. (1) An application for the grant of a
petroleum prospecting
licence
petroleum prospecting licence may be
made only by a body corporate and in the prescribed
form and shall -
(a) give the body corporate’s name and place
of incorporation, the names and nationality
of the directors or equivalent officers and,
i f the body corporate has a share capital,
the name of any person who is the
beneficial owner of more than five per
centum of the issued share capital;
identify the block or blocks in respect of
which it is made;
be accompanied by particulars of -
(b)
(c)
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(i) detailed and adequate proposals
for work and minimum
expenditure in respect of the block
or blocks specified in the
application during the term of the
licence;
(ii) technical qualifications of the
applicant;
(iii) financial resources, including
capital, credit facilities and
guarantees available to the
applicant ;
(d) set out other matters that the applicant wishes the
Minister to consider; and
be accompanied by a receipt evidencing payment
of an application fee of ......... US dollars. (e)
(2) regulation with respect to adequate work and expenditure
proposals is deemed to have been met in any case where
the proposals satisfy the requirements (if any) with
respect to work and expenditure obligations contained in
a relevant agreement of a kind referred to in section 1 1
of the Petroleum Act.
The requirement in paragraph (1) (c) (i) of this
(3) block, the blocks applied for
Where an application relates to more than one
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(a) shall be so situated as to form a single
area; and
shall be such that each block in the area
has a side in common with at least one
other block in the area.
(b)
(4) prospecting licence shall be made in the same manner as
is prescribed under paragraph (1) of this regulation and
shall be made not less than one hundred and eighty days
before the date of expiry of the petroleum prospecting
licence held by the licensee.
An application for the renewal of a petroleum
Application for 5. (1) An application for the grant of a
petroleum development
licence body corporate and shall:
petroleum development licence shall be made by a
(a) give the body corporate’s name and place
of incorporation, the names and nationality
of the directors or equivalent officers and,
if the body corporate has a share capital,
the name of any person who is the
beneficial owner of more than five per
centum of the issued share capital;
identify the block or blocks in respect of
which it is made; (b)
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(c) state the applicant’s petroleum prospecting
licence in respect of the blocks applied for
(if any);
(d) state the period for which the licence is
sought;
give a comprehensive report of the
petroleum deposit, which report shall
include a description of the petroleum
reservoir or deposit, the form of the
petroleum and an estimate of the
petroleum reserves;
contain a proposed programme of
production operations which shall include -
(i)
(e)
(f)
the date by which the applicant
intends to start production;
the capacity of production and scale
of operations;
the estimated overall recovery of
petroleum and by-products;
the nature of the petroleum and by-
products;
(ii)
(iii)
(iv)
(v) the production and processing
possibilities and the intention of the
applicant in relation thereto;
(vi) the marketing arrangements made
for the sale of the petroleum and
by-products;
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(g) provide particulars of the applicants
technical qualifications and financial
resources, including capital, credit
facilities and guarantees,
give a detailed forecast of capital
investment, operating costs and sales
revenues;
contain proposals with respect to the
employment and training of Solomon
Islands citizens;
give a report of the goods and services
required for the production and processing
operations which can be obtained within
Solomon Islands and the applicant’s
intention in relation thereto;
give details of expected infrastructure
requirements; and
may set out any other matter that the
applicant wishes the Minister to consider.
(h)
(i)
(j)
(k)
(l)
(2) An application for the grant of a petroleum
development licence shall be accompanied by a receipt
evidencing payment of an application fee of ..................
US dollars.
Bidding for licences 6. (1) The Minister may direct that a petroleum
prospecting licence or petroleum development licence in
respect of any block or blocks shall be granted only after
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bids have been received and evaluated and he may
specify the procedures by which interested parties may
take part in any such bidding.
(2) Neither a request to participate in bidding
nor the submission of a bid in respect of any block or
blocks shall create any right in favour of any applicant.
The Minister shall have the right to reject or accept any
or all bids which may be received, without assigning any
reasons therefor.
Petroleum Agreements 7. (1) The Minister on behalf of the State, may
enter into a petroleum agreement with any body
corporate which is a licensee or a prospective licensee
embodying terms and conditions on which petroleum
operations are to be carried out by the body corporate.
(2) The Minister may from time to time
prescribe and publish in the official Gazette, a model
petroleum agreement.
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PART III. WORK OBLIGATIONS AND AREA RELINQUISHMENT
Minimum Work Obligation 8.
the exploration period a minimum work obligation,
including a minimum drilling commitment, to be
specified in the relevant petroleum agreement.
The licensee shall be required to undertake during
Expenditure Commitment 9. The licensee may be required to spend a
minimum sum, to be specified in the relevant petroleum
agreement, to carry out the minimum work obligation
undertaken by the licensee pursuant to regulation 8.
Performance bond 10.
Government a bond or banker’s guarantee, acceptable to
the Minister, for the total amount of the expenditure
obligations stipulated under Regulation 9.
The licensee may be required to provide to the
Relinquishment of licence 11. (1) Each prospecting licence shall
area provide that the licensee must during various phases of
the exploration period relinquish specific portions of the
licence area.
(2) Not later than the expiration of the
exploration period, the licensee shall relinquish all of the
area the subject of the propecting licence except for any
development area or production area.
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(3) To effect the relinquishment requirements
of this regulation, a licensee shall give written notice to
the Minister not less than ninety (90) days prior to the
date fixed by the relevant petroleum agreement for
relinquishment, specifying the blocks or parts thereof to
be relinquished.
(4) A licensee may at any time voluntarily
relinquish all or any part of a licence area, provided that
at the time of such voluntary relinquishment, the licensee
is not in arrears in fulfilling its financial and other
obligations under any petroleum agreement relating to
that licence area.
Shape of relinquished areas 12.
12 shall, unless the Government otherwise determines:
(a) consist of entire blocks or quarter blocks;
(b) insofar as is reasonably possible, be contiguous
and compact and of sufficient size and suitable
shape so as to permit the effective carrying out of
exploration operations on the relinquished area;
and
be such that the licence area remaining after
relinquishment is as far as possible contiguous
and compact; and shall conform to such further specifications as
may be included in the licence or any petroleum
agreement pertaining to the area.
Any area relinquished pursuant to this regulation
(c)
(d)
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PART VII. DISCOVERY AND DEVELOPMENT
Appraisal Programme 13. (1) If petroleum is discovered in the licence
area, the licensee shall immediately report in writing
such discovery to the Minister.
(2) Unless the licensee when reporting the
discovery under paragraph (1) of this regulation notifies
the Minister that the discovery does not merit appraisal,
the licensee shall within ninety days, or such other period
as is stipulated, in the relevant petroleum agreement for
this purpose, submit to the Minister, or such Government
agency as may be designated in the petroleum agreement,
a work programme for appraisal of the discovery.
Evaluation Report 14. Within a period of ninety days after the
completion of the work programme submitted under
regulation 13 (2) the licensee shall submit to the
Minister, or such Government agency as may be
designated in the relevant petroleum agreement an
Evaluation Report, which shall include, but not be
limited to the following information:
(a) geological conditions, such as structural
configuration, physical properties and extent of
reservoir rocks;
production volume and temperature analysis of the
reservoir fluid; (b)
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(c) fluid characteristics, including oil gravity, sulphur
percentage, sediment and water percentage, and
product yield pattern;
production forecasts (per well and per fuil);
estimation of recoverable reserves; and
evaluation of commerciality in accordance with
criteria specified in the relevant petroleum
agreement,
(d)
(e)
(f)
Commerciality and 15. When the discovery is determined to be
General Development
Plan
commercial in accordance with criteria
stipulated in the petroleum agreement, the licensee shall
submit with the Evaluation Report a General
Development Plan which shall contain but not be limited
to, the following information:
(a) a general description of the techniques and
equipment by which it is proposed that the field
will be developed;
a general description of the goods, labor and
services that could be obtained in Solomon
Islands;
an environmental impact statement describing the
possible environmental effects of the proposed
development plan;
a description of the technical and economical
feasibility of alternative methods of development:
(b)
(c)
(d)
- 13 -
(e) where any pool extends beyond the licence area,
the suggested unitization agreement in accordance
with applicable law;
the manner in which the licensee proposes to
finance the development of the petroleum field;
and
a map delineating the proposed development area.
(f)
(g)
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PART IV. CONDUCT OF OPERATIONS
Good Oilfield Practices 16. Exploration for and production of petroleum shall
be carried out at all times in a safe manner in accordance
with good oilfield practices and with the Regulations in
force.
Work programmes 17. Licensees shall conduct their operations in
accordance with work programmes approved pursuant to
petroleum agreements to which they are party in a diligent, efficient and workmanlike manner.
Ministerial directions 18. (1) The Minister may give a licensee
directions, not inconsistent with the terms of any
petroleum agreement, from time to time, and the licensee
shall carry out such directions, with respect to the
following:
(a) the use of local goods, labor, and services
in petroleum operations, provided that
such goods, labor and services are of
adequate quality and can be supplied
competitively;
the training and employment of local
personnel;
the allowable rate of petroleum recovery:
the unitization of oil fields extending
beyond a single licence area.
(b)
(c)
(d)
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(2) If a licensee at any time fails to carry out
operations in a safe manner in accordance with good
oilfield practice, the Minister may, after giving to the
licensee reasonable notice, do any of the things which in
the opinion of the Minister may be necessary to ensure
safety and to recover the costs and expenses of so doing
from the licensee.
Conservation of 19. (1) A licensee shall conduct operations petroleum in accordance with the best conservation practices,
bearing in mind the long term objective of maximizing
ultimate recovery of petroleum originally in place.
(2) A licensee shall take all reasonable
measures after the discovery of petroleum in any well
capable of producing in commercial quantities to put
such well into operation without undue delay, subject to
the terms of any petroleum agreement.
(3) A licensee shall not start production from
any field or well before testing and ascertaining to the
satisfaction of the Minister that the well has been
properly completed in accordance with good oilfield
practices. The licensee shall inform the Minister
sufficiently in advance to enable him to send such
representatives to be present at such tests.
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Seismic surveys 20. (1) A daily log shall be kept of seismic
surveys which shall at all times be carried out in
accordance with good industry practice.
(2)
(a)
The log shall include information on:
the size of the charges and the number of explosions, with an accurate indication of
the shot points;
charges which fail to fire or which misfire;
any observed effects of the surveys on marine life.
(b)
(c)
(3) The Minister may require the log to be
produced for inpection and copying.
Drilling approval 21. (1) No well shall be drilled -
a) without the approval of the
Minister, which approval shall not
be unreasonably withheld; or
so as to deviate at any point out of
the licence area; b)
(2) No well shall be sited within 200 metres of
the boundary of any licence area.
(3) Each well shall be described by a certain
number (which shall be notified to the Minister) in the
records, maps and plans which the licensee is required to
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keep and any change in that number shall likewise be
notified to the Minister.
(4) Where work at a well has been
discontinued for more than three months, the well shall
not be recommenced (except for the purpose of cleaning
out operations in a producing well) unless seven days’
notice of the intended recommencement is given to the
Minister.
Drilling supervision 22. (1) Before any drilling is commenced, an
organization plan shall be submitted to the Minister
identifying the individuals responsible for supervision of
the drilling.
(2) The plan referred to in paragraph (1) must
expressly stipulate the abilities of the responsible
individuals, and the chief responsible individual must, as
far as possible, have maritime experience or always have
an assistant with sufficient maritime experience.
(3) The chief responsible individual or his
deputy shall always be present on the drilling platform or
rig.
Drilling programme 23. (1) The licensee shall submit to the Minister a
drilling programme which, inter alia, shall contain the
following information:
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(a) a description of the construction
and equipment of the drilling
platform, as well as information as
to whether the drilling shall be
carried out by persons other than
the licensee;
(b) information on the geographical
position of the well;
the estimated total depth of the
well;
the geological strata which are expected to be penetrated;
depth of the ocean at the well site;
a programme for the installation of
casing and the programme shall
give the necessary details as to
diameter, weight and type of
casing, whether new or used casing
is to be employed, at what depth
the casing is intended to be
installed;
(c)
(d)
(e)
(f)
(g) a cementing programme.
(3) Major changes in the drilling programme
shall not be made without the Minister’s consent:
Provided that in an emergency, the drilling
programme may be departed from without prior consent.
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The Minister shall in such cases be notified forthwith of
the alterations and of the underlying circumstances
requiring such changes.
Location and removal of 24. Before provisional or permanent
installations installations, including all types of drilling platforms, are
put in place, the Minister’s written consent to the
location or relocation must be obtained. The Minister shall likewise with sufficient time in advance, be
informed about removals and movements of the said
installations.
Towing Drilling Platforms 25. (1) Towing of drilling platforms shall not be
carried out without prior notification to the Minister.
The towing shall be carried out at all times in accordance
with international and domestic regulations and rules in
force. The Minister or anyone authorized by him may
give further directions for the towing.
(2) Only essential personnel shall remain on
the platform during towing and all proper safety
measures shall be taken for the operation.
(3) Towing shall be carried out in such a
manner that it causes the least possible nuisance in the
area and special care shall be taken with regards to
fishing and shipping in the area.
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Approval of Platform 26. (1) A licensee shall, within a reasonable time
period prior to the commencement of drilling operations,
transmit to the Minister a description of the platform,
together with necessary drawings and specifications.
(2) Prior to the commencement of drilling
operations, the consent of the Minister must be obtained
for the use of the drilling platform, installations and
equipment described to the Minister pursuant to
paragraph (1).
Safety devices 27. (1) Prior to the start of initial drilling
operations in a well, all necessary safety devices for the
proper control of the well must be present and easily
available on the platform. The said devices shall be
installed in accordance with good oilfield practice.
(2) During drilling, all necessary steps shall
be taken to keep the well under full control to prevent
the release of oil, gas, water and other substances which
may cause explosions, blow-outs, pollution or other
destruction or accidents.
(3) In the event of an explosion, blow-out or
other accident in a well all necessary steps shall
immediately be taken in accordance with good oilfield
practice to re-establish safe working conditions and bring
the well under control. All necessary measures must
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immediately be taken to repair, as far as possible, all
damage sustained.
Surface casing 28. (1) Each well must be equipped with surface
casing according to good oilfield practice. The surface
casing shall be cemented at a depth justified by the
geological conditions and with a view to maintaining
complete control of the well at all times.
(2) The surface casing shall be properly
cemented over its full length. The cement shall be given
sufficient time to set prior to the commencement of
further drilling.
Intermediate casing 29. Intermediate casing must be installed and
cemented in such a manner, and at such time, as to
ensure full control of the well at all times, considering,
inter alia, the geological conditions of the subsurface the
danger of blow-outs, the protection of other resources in
the subsurface and the danger of pollution.
Production casing 30. Production casing shall be installed and cemented
in such a manner as to isolate all hydrocarbon-bearing
strata.
Deviated drilling 31. (1) Drilling which intentionally deviates from
the vertical line drawn from the centre of the well on the
seabed, shall not be allowed without the written consent
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of the Minister. Such consent is not required, however,
for deviations over short intervals, deviations to
straighten out the well or to overcome difficulties
encountered during drilling.
(2) The written consent of the Minister is required in cases of drilling multiple holes from the same
location.
Discontinuance of drilling 32.
in advance of discontinuance of extended duration and of
the resumption of drilling operations.
The Minister shall be informed at least 24 hours
Abandonment of Wells 33. (1) A well shall not be abandoned without the
consent of the Minister which shall not unreasonably be
withheld. To obtain such consent a licensee shall notify
the Minister of the reasons for abandoning the well and
submit a plan setting out the manner in which the well
will be plugged, secured and abandoned.
(2) The Minister may stipulate a time limit
within which each installation in or above the well shall
be removed.
Plugging of Wells 34. (1) An abandoned well shall be plugged in
accordance with good oilfield practice with top cement
plugs and with additional cement plugs in such a number.
of flush length and with such spacing between the
- 23 -
individual plugs as is required in order to maintain
complete control of the well and prevent the penetration
of salt water or other alien matter into the well.
(2) The well, including the interval between
the cement plugs, shall be filled with drilling fluid or
other fluid of sufficient density and with such other
properties to safely withstand, together with the plugs,
any pressure which may develop within the well.
Removal of obstructions 35.
and other installations protruding from the seabed shall
except as provided in regulation 34 be removed to such a
depth that no obstruction remains which may cause
danger or impediment to fishing or shipping. Before
final abandonment of the well, the licensee shall ensure
that on the seabed, and on the surface of, or in the
vicinity of drilling location, no obstructions of any kind
remain as a result of his operations which may cause
damage or impediment to fishing, shipping or other
activities.
When a well is abandoned, parts of casing strings
Raising or lowering 36. (1) During operations whereby the
platforms platform is raised or lowered, only essential personnel
shall be present. Personnel remaining onboard shall, as
far as possible, be stationed on deck and be equipped
with approved life vests. Suitable means for safe and
immediate removal of personnel from the platform shall
- 24 -
remain in readiness during the entire operation. In
addition, a stand-by vessel with sufficient capacity and
equipment shall be kept ready in the immediate vicinity
of the platform.
(2) The raising and lowering maneuvers shall,
as far as possible, be undertaken in daylight and only
when rendered safe by wind and weather conditions.
Visitors on platforms 37. (1) No person shall be allowed to enter the
drilling platform without permission from the licensee or
anyone authorized by him.
(2) During their stay on the platform visitors
shall comply with the safety rules applicable to the
platform. Visitors shall upon arrival be instructed about
safety regulations in force. Specific information shall be
given about areas where smoking is allowed.
Safety instructions 38. (1) Detailed safety instructions shall be
prepared for each drilling platform. Each employee shall
be required to sign a receipt for his individual copy of
the safety instructions.
(2) The person in charge of each platform
shall ascertain that the workers have understood all
verbal and written instructions given for the execution of
work operations.
- 25 -
(3) General instructions shall be prepared for
each drilling platform with regard to measures to be
taken in emergencies. These instructions shall likewise
be handed to the personnel in the same manner as the
safety instructions referred to above. At frequent
intervals drill exercises shall be held with a view to
coping with emergencies.
(4) A licensee shall comply with instructions
given from time to time by the Minister for protecting
the safety, health and welfare of persons in or around the
licence area.
Lighting on platforms 39. (1) The drilling platform shall be equipped
with adequate electric lighting to make work and stay
onboard as safe as possible.
(2) The drilling platform shall be equipped
with an adequate emergency lighting powered from an
independent energy source. The emergency lighting
system shall be switched on immediately should the
ordinary lighting system fail.
(3) Flash lights of an approved type shall be
easily available at appropriate places.
(4) The emergency lights and the flash lights
shall be inspected at regular intervals.
- 26 -
Positioning of platforms 40. (1) The drilling platform shall be positioned so
as to give maximum protection to operations performed
thereon, including the mooring of vessels and the landing
and take-off of helicopters.
(2) The lower deck of the drilling platform
must be at a safe distance above the sea level.
Stand-by vehicle 41. When circumstance so demand, the licensee shall
provide for a stand by vessel which shall be stationed at
the platform during drilling operations. The stand-by
vessel shall have sufficient capacity and equipment to
take onboard and provide for the total crew of the
platform in cases of emergencies.
Gas detectors and explosion 42. (1) Gas detectors or explosion meters
meters shall be readily available on the platform.
(2) The platform shall likewise be provided
with sufficient oxygen apparatus for full breathing
protection.
(3) If sulphurous or other poisonous gases are
encountered during drilling, all necessary safety
precautions shall be taken to prevent accidents. The
Minister shall be notified forthwith of any such event.
- 27 -
Chemical treatment of a well 43. (1) Swabbing, formation testing, shooting,
hydraulic fracturing, acidizing or other chemical
treatment of a well, shall take place by daylight and only
when wind and weather conditions render it safe.
(2) The work referred to in paragraph (1) shall
be performed in such a way that the well shall not be
damaged and that salt water or other alien matters shall
not be allowed to penetrate into the well.
(3) Prior to the commencement of the
activities mentioned in paragraph (1), the drilling
platform shall be cleared of all unnecessary obstructions.
Only personnel necessary for the operation shall be on or
below the drilling floor, or in the immediate vicinity.
All necessary precautions against fire shall be taken, and
firefighting equipment shall be ready for immediate use.
(4) During acidizing operations personnel who
may come in contact with acid shall be provided with
protective clothing including hoods, gloves and boots.
(5) Acid-containers shall be handled with care
and shall during transportation and use be properly
secured so as to prevent unnecessary movement,
breakage or the infliction of damage to the surroundings
- 28 -
(6) A sufficient amount of neutralizing
material shall be easily available for neutralizing any
spillage of acid.
(7) After termination of the activities
mentioned in paragraph (1), the well and the drilling
platform shall immediately be cleaned.
Safety wear 44. (1) Personnel working on the drilling platform
shall be equipped with safety helmets, safety boots,
safety belts and other safety equipment which they are
obliged to use when working conditions so require.
(2) No one shall be allowed in areas where
there is lack of oxygen or where the air may be polluted
by inflammable or poisonous gases or by other vapours
or dust in such quantities as to endanger human life or
health, unless that person is equipped with appropriate
breathing apparatus.
Diving operations plan 45. (1) The licensee shall submit a diving
operations plan for approval to the Minister before diving
operations are commenced. The plan shall contain
details concerning the equipment to be used and the
safety precautions to be taken to protect the life and
health of the diver.
- 29 -
(2) Permission shall be obtained in advance
from the Minister before diving operations can
commence.
(3) Diving operations shall be carried out in a safe manner and in accordance with any directions of the
Minister.
Condition of working areas 46. (1) Working areas shall at all times be kept as
clean and free of obstacles as possible. Possible
obstacles, protruding points, low ceilings etc. shall be
properly marked.
(2) The drilling platform shall as far as
possible be kept free of oil spillage.
(3) The living quarters shall at all times be
properly cleaned and kept in good order.
First Aid 47. (1) First aid and resuscitating equipment shall
be available at all times.
(2) On each shift at least one member of the
licensee’s personnel shall have taken an approved first
aid course.
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(3) The greatest possible number of the
personnel shall be taught an approved method of artificial
respiration.
(4) Before drilling operations are started,
arrangements shall be made to ensure that a medical
doctor is available at all times for transport to the
platform at the shortest possible notice.
Diseases 48. (1) If a disease is detected on the platform
which may be of contagious nature or otherwise be a risk
to the health of the personnel or others, a medical doctor
shall be called to the platform at once.
(2) transportation of a medical doctor to and from the
platform and transportation of a sick or injured person to
a shore facility.
The licensee is obliged to arrange for and pay for
Fatalities 49. (1) If fatalities or other serious accidents
occur, immediate notification shall be given to the
Minister. In addition, a report shall be forwarded to the
Minister in connection with all accidents or illness which
result in a person being disabled for more than three
days.
Electrical Installations 50. (1) Electrical installations, plant and
equipment of any nature shall be constructed, installed
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and maintained in such a manner as to prevent, as far as
possible, danger of accidents, fires, explosions etc., and
shall at all times be maintained in accordance with good
oil field practices.
(2) Portable electrical equipment, installations
and lights to be used in danger areas on the drilling
platform shall be of explosion-proof construction.
(3) The drilling platform shall be equipped
with a main switch for all electrical installations in
danger areas. Such main switch shall be installed in a
place easily accessible and outside danger areas. The
main switch shall also be equipped with a remote control
that can be operated from the driller’s stand.
(4) A qualified electrician shall always be
available on the drilling platform. Only qualified
electricians may carry out onboard,
(a) installation and maintenance of electrical
equipment and wires;
examination and testing of electrical
equipment and wires. (b)
Fire Prevention 51. (1) All personnel engaged in petroleum
operations shall exercise care in connection with all
activities which may cause fire. Special care shall be
- 32 -
shown in the handling and storing of inflammable
equipment and materials such as explosives, inflammable
liquids and gases and materials with a tendency for self-
ignition etc.
(2) On each drilling platform there shall be a
firechief who shall have the responsibility for fire
prevention and fire fighting services onboard the
platform. In addition, a firefighting squad shall be
designated, consisting of a sufficient number of personnel
who have received training in efficiently fighting fires
and preventing and reducing the effect of explosions with
the firefighting equipment at hand.
(3) A firefighting plan shall be elaborated
advising each employee of his place and task in case of
fires. For each shift, a firefighting leader shall be
appointed.
(4) All personnel shall be familiar with the
firefighting plan, which shall be posted in conspicuous
places.
(5) Fire drills shall be held regularly and a
record shall be made in the daily log concerning fire
drills held and checks made on the firefighting
equipment.
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Firefighting equipment 52. (1) The drilling platform and its installations
and equipment shall as far as possible be of fireproof
material.
(2) The drilling platform shall be equipped
with firefighting equipment of an appropriate type and
capacity for effective firefighting operations. Such
equipment shall be located in suitable places and shall
always be ready for immediate use.
(3) Fire pumps and their prime movers shall
be so positioned that sufficient pressure can be
maintained in the fire hoses anywhere on the drilling
platform,
(4) The engine room of the drilling platform
shall be equipped with a permanent main firefighting
system or other firefighting equipment deemed
satisfactory by the Minister.
(5) The drilling platform shall be equipped,
with a sufficient number of approved mobile fire
extinguishers. These extinguishers shall be placed within
easy reach in strategic positions on the platform and shall
always be ready for immediate use.
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(6) A sufficient quantity of refill material for the fire extinguishers shall be available on the platform at
all times.
Fire detection 53. (1) Adequate procedures shall be established
on the drilling platform to ensure immediate detection
and alarm of fire.
(2) The platform shall be equipped with a fire
alarm system which can easily be heard throughout the
platform.
Fire hazards 54. (1) Use of fire, naked light or working
operations causing sparks shall be permitted only in
places where such activities will not create danger of fire
or explosions, and only with the consent of the firechief.
(2) Smoking may be allowed in the living
quarters of the drilling platform. In addition to such
areas, smoking may be allowed only in such areas and at
such times when it can safely take place.
(3) Welding or metal cutting by gas or
electricity shall be carried out in a safe manner and in
accordance with any directives issued by the Minister.
All necessary precautions shall be taken during the
performance of such work to ensure that:
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(a) the welding and cutting equipment
are in good operating condition;
the place where welding is to be
performed is free of gas and that,
as far as possible, no inflammable
material of any kind is present in
the vicinity of the welding site; and
(c) firefighting personnel and sufficient
firefighting equipment are on hand.
(b)
(4) After completion of any welding or cutting
work, the work area shall be thoroughly checked so that
sparks or glows will not cause fire.
Explosives 55. (1) On a drilling platform, only types of
explosives, including detonators or boosters, approved by
the Minister shall be used. The explosives shall be of
such a type as to be rendered harmless after being in
seawater for a period of 24 hours at the maximum:
Provided that such requirements should not apply
to perforating charges and charges used for casing,
cutting and such similar operations.
(2) Explosives shall be kept onboard the
drilling platform only immediately prior to their use, and
only in such quantities as are required for the expected
use.
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Explosives magazines 56. (1) Explosives shall be stored in magazines
which are specially approved for this purpose by the
Minister. Detonators, boosters, and blasting charges
shall be kept separated.
(2) The magazines shall be so placed and
constructed so that the explosives can easily be thrown
overboard in cases of emergency.
Transporting explosives 57.
platform, as well as loading and unloading, shall be
undertaken with the utmost care.
The transportation of explosives to and from the
Conditions for using 58. (1) Blasting shall not be carried out
explosives during thunderstorms or other unfavourable weather
conditions. Blasting shall, as far as possible, be carried
out only during daylight.
(2) Radio equipment and other equipment
which may endanger blasting activities shall not be in
operation while blasting is carried out. Radio silence
shall also be observed on ships and helicopters which are
at a safe distance from the platform, considering the type
and power output of the radio equipment.
(3) There shall be no landing and take off of
helicopters and mooring of vessels during blasting
operations.
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Other laws applicable to use of explosives
59.
applicable law regarding transport, storage and use of
explosives shall apply to petroleum operations.
In addition to these regulations, any
Perforating 60. (1) Perforating of wells shall be carried out in
accordance with good oilfield practice.
(2) During perforation work, all necessary
precautions shall be taken. Extreme caution shall be
exercised to prevent premature firing.
(3) Ammunition for perforating guns shall be
stored in metal containers properly earthed.
Telecommunications 61. (1) The drilling platform shall have all
necessary equipment for radio communication.
(2) Before any platform is put into operation,
the radio installation shall be approved by the Minister.
(3) The radio equipment shall be permanently
installed in a suitable radio room so that it will not be
damaged or displaced by sudden movements of the
platforms.
(4) The radio installation shall only operate on
approved frequencies and with approved power output
and in compliance with the conditions laid down in the
- 38 -
radio communication licence issued for the said
installation. It shall be maintained and operated in
accordance with the international conventions in force at
any time to which Solomon Islands is a party and in
accordance with the applicable laws.
(5) Broadcasting (sound and television) from
the platform is prohibited.
(6) The radio installations shall provide
connections with stations on land, ships, helicopters and
other drilling platforms in the area.
(7) The platform shall likewise be equipped
with sufficient number of approved portable radio
receivers and transmitters for lifeboats and other survival
craft.
Communication system 62. (1) The drilling platform shall have at its
disposal a communication system consisting of ships and
helicopters sufficient for good operation and proper
maintenance of the platform.
(2) The communication system shall be
organized in such a way that it can be used promptly and
efficiently in any emergency which may arise.
- 39 -
(3) Before the drilling platform is put into
operation, the licensee shall submit to the Minister a plan
governing the communication system. The platform shall
not be put into operation until this system has been
approved by the Minister.
Vessel mooring and 63. (1) The drilling platform shall be so helicopter decks constructed and have proper fender systems, buoy
systems or similar arrangements making safe transfer of
persons and goods to or from the platform possibly
without creating hazards for the platform, vessel, persons
or goods.
(2) Vessels shall not moor, be moored or
remain alongside the platform when wind and weather
conditions create danger for the vessel or the platform.
(3) The drilling platform shall, where
appropriate, be equipped with an approved helicopter
deck.
(4) The drilling platform shall be constructed
in such a manner as to secure an unobstructed flightpath
to and from the helicopter deck.
(3) The drilling platform shall have such
equipment and installation as are necessary for safe
- 41 -
PART V. PROTECTION OF THE ENVIRONMENT, NAVIGATION,
FISHING, AND MARINE AND OTHER RESOURCES
Conservation of living
resources 64. A licensee shall carry out operations in
such manner as to ensure that there will be no
unnecessary interference with fishing or the conservation
of the living resources of the sea and shall take such steps as the Minister may reasonably direct to ensure that
after the completion of petroleum operations in the
licence area or any part thereof by the licensee there will
be no such interference.
Compliance with navigation 65. (1) Survey vessels and aircraft carrying
and aviation regulations out exploration must comply with international and
domestic regulations and rules in force at the time for the
particular location, in connection with navigation and
aviation respectively.
(2) Vessels to be used for seismic surveys
must be equipped with radar, echo sounder and sonar.
Aircraft shall not to be used for seismic
surveys without written permission from the Minister. (3)
Protection of the 66. A licensee shall carry out petroleum
environment operations in such a manner as to:
(1) ensure minimum ecological damage or
destruction;
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(2) control the flow and prevent the escape or
avoidable waste of petroleum discovered in
or produced from the licence area;
(3) prevent damage to petroleum-bearing
strata;
prevent the entrance of water through
bore-holes and wells to petroleum-bearing
strata, except for the purpose of secondary
recovery;
prevent damage to on-shore lands and to
trees, crops, buildings and other
structures; and
avoid any actions which could endanger
the health or safety of persons.
(4)
(5)
(6)
Pollution control 67.
release of petroleum or other materials on the seabed in
the sea, or land or in fresh water, or if a licensee’s
operations result in any other form of pollution or
otherwise cause harm to fresh water, marine or animal
life, the licensee shall promptly take all necessary
measures to control the pollution, to clean up any
released petroleum or other materials, or to repair, to the
maximum feasible extent, any damage resulting from the
said circumstances. The cost of such control, clean-up
and repair activities shall be paid by the licensee.
If a licensee’s operations result in the uncontrolled
Government execution of 68. If a licensee does not act promptly so to
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pollution control control, clean up, or repair, as the case may be, the
Government, after giving the licensee reasonable notice
in the circumstances, may itself take any action or
execute any work which is necessary, and the costs and
expenses of such work shall be borne by the licensee.
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PART VI. RECORDS AND REPORTS
Records to be maintained 69.
in a form from time to time approved by the Minister
containing particular of the following matters, namely -
Each licensee shall keep full and accurate records
(a) the drilling, deepening, plugging or
abandonment of wells;
the strata and subsoil through which wells
are drilled;
the casing inserted in wells and any alteration to such casing;
any petroleum, water and other economic
minerals encountered;
the areas in which any geological or
geophysical work has been carried out;
such other matters related to the above as
the Minister may from time to time
reasonably require.
(b)
(c)
(d)
(e)
(f)
Accounts of crude oil and
natural gas etc.
70.
Islands full and correct accounts (in a form from time to
time approved by the Minister), which shall contain
accurate entries of -
Each licensee shall, keep in Solomon
(a) the gross quantity of crude oil and natural
gas won and saved from the licence area;
the grades and gravity of the crude oil
produced and the composition of natural
gas produced;
(b)
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(c) the quantities sold of - (i) crude oil;
(ii) natural gas;
(iii) natural liquids;
(iv) each refined petroleum product,
including liquified petroleum gases;
sulphur, in any form, or any other
minerals, in any form, or any other
gases, liquids or solids,
(v)
together with the names of the purchasers,
the quantity purchased and the price paid
by each purchaser;
the quantity injected into the formation of - (i) crude oil;
(ii) natural gas;
(iii) natural gas liquids;
(iv) each refined petroleum product,
(d)
including liquified petroleum gases;
water and other liquids or gases; (v) the quantity consumed for drilling and
other production operations other than
quantities reported under paragraph (d) of
this regulation, and consumed in pumping
to field storage and refineries in Solomon
Islands of:
(i) crude oil;
(ii) natural gas;
(iii) natural gas liquids;
(e)
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(iv) each refined petroleum product,
including liquified petroleum gases;
(f) the quantity of crude oil refined in
Solomon Islands;
the quantity of natural gas treated in the
Solomon Islands for the removal of natural
gas liquids and liquified petroleum gases
and the quantity of any liquids or gases or
any solids obtained from it;
the quantity of natural gas flared; and
such further information as the Minister
may reasonably required from time to
time.
(g)
(h)
(i)
Daily log 71. (1) On the drilling platform the licensee shall
keep a daily log on a form approved by the Minister.
The log shall be made at least in duplicate, and one copy
shall be filed at the licensee’s office in Solomon Islands.
The other copy shall at all times be retained at the
platform and be available for inspection by persons
authorized by the Minister.
(2) The daily log shall contain information and
data on all operations during the day including:
(a) the depth of the well at the
beginning of the day;
the depth of the well at the end of
the day; (b)
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(c) (d) the geological formations
the diameter of the borehole;
encountered;
characteristics of the drilling fluid
used; (e)
(f) installation of casing;
(g) if casing is installed, all relevant
data concerning the installation,
indicating the diameter, type,
weight, together with information
whether new or used casing is
employed and to what depth the
casing string has been installed;
(h) particulars concerning cementing;
(i) (k) deviation measurements, formation
water, oil and gas encountered;
tests, pressure tests, temperature
measurements in the well as well as
other tests undertaken;
any other operations carried out,
such as the recovery of broken
drillpipes from the borehole,
shooting, perforating, fracturing or
acidizing of the well, completion or
abandonment of the well.
(l)
(2) The daily log shall further contain
information about accidents, damages, injuries and other
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Occurrences and other information which may be deemed
of current or future interest to the Minister.
(3) The Minister may require further
information concerning the activities carried out.
Record of persons on platform
72.
record of all persons present onboard the platform or on their way to and from the platform specifiying the name
of the individual and the name of the company or agency
by whom he is employed. The record shall be available
to the Minister or anyone authorized by him at the
licensee’s office in Solomon Islands.
The licensee shall at all times keep a
Samples 73. (1) The licensee shall, while drilling is in
progress, collect from the drilling fluid samples of all
rock types in all the geological formations penetrated.
(2) All samples collected shall be washed,
dried and preserved in bags suited for this purpose. The
bags shall be labelled with the name of the well and the
date the samples were collected and the depths or origin.
The samples or parts thereof shall within three months
after the completion or abandonment of the well be
dispatched, at the expense of the licensee, to the Minister
or a location designated by the Minister.
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(3) Geologists of the Government shall at any
time have access to the samples.
Cores 74. (1) The licensee shall, when it is deemed
necessary, take and keep cores of the various geological
formation penetrated.
(2) Within three months of the termination of drilling, the licensee shall dispatch at his own expense,
complete longitudinal sections of each core to the
Minister or a location designated by the Minister. The
longitudinal section shall contain not less than one half of
the core. The Minister shall receive copies of
descriptions and analyses made of the core.
(3) Geologists from the Government shall at
any time have access to the core.
Reports 75. The licensee shall keep the Minister regularly and
fully informed of operations being carried out by the
licensee and shall promptly provide the Minister with
information, data, samples, interpretations and reports
including progress and completion reports, including:-
(a) processed seismic data and interpretations
thereof;
well data, including, but not limited to,
electric logs and other wireline surveys,
mud-logging reports and logs, samples of
(b)
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cuttings and cords and analyses made
therefrom;
special reports, such as those prepared
from drilling data, geological or
geophysical data, including maps or
illustrations derived therefrom;
well testing and well completion reports;
reports dealing with location surveys, seabed conditions, and seafloor hazards, or
other reports dealing with well, platform
or pipeline locations;
(c)
(d)
(e)
(f) reservoir investigations and estimates
regarding reserves, field limits and
economic evaluations relating to future
operations;
daily, weekly, monthly and routine reports
on the petroleum operations;
comprehensive final reports upon the
completion of each specific operation;
contingency programmes, and reports on
safety and accidents;
(g)
(h)
(i)
(j) procurement plans, sub-contracts and
service contracts;
design drawings, design criteria or
specifications, and construction records;
reports of technical investigations relating
to petroleum operations;
(k)
(l)
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(m) reports of any other investigations based upon data from the licence area;
such other reports as may be required by Accounting Procedures stipulated in a
petroleum agreement.
(n)
Periodic submission 76. (1) Within forty-five (45) days after
of reports the end of each calendar quarter, the licensee shall
prepare and deliver a quarterly progress report to the
Minister which shall contain a narrative report of
activities during such quarter with plans and maps
showing the places where work was done. Such
quarterly reports shall contain:
(a) a summary of all geological and
geophysical work carried out and
results obtained;
a summary of all drilling activity
and results obtained; and
a list of maps, a list of reports and
a list of other geological and
geophysical data prepared by or for
the licensee.
(b)
(c)
(2) Within four (4) months after the end of
each calendar year the licensee shall prepare and deliver
to the Minister an annual report which shall consolidate
the information contained in the quarterly progress
reports furnished in respect of such calendar year.
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(3) The licensee shall also submit to the
Minister the following reports:
(a) within two months after the first
day of January and the first day of
July in each year, estimates of
crude oil and natural gas production
and exports for each of the 4 half
year periods immediately following
each of the said dates;
within four months after the end of
each calendar year an estimate of
economically recoverable reserves
of crude oil and natural gas at the
end of that year;
(b)
(c) summaries of each exploration
well, (stating lithological groups,
the letter classification boundaries
and the hydrocarbon zone) within
six months of completion of
drilling, provided that such
information as cannot reasonably be
obtained within this period shall be
submitted as soon as possible;
from time to time, such other plans
and information as to the progress
and results of the licensee’s
operations as the Minister may
reasonably require; and
(d)
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(e) on relinquishment of any part of the
licence area such maps, plans,
reports, records, interpretations and
data, made or obtained by or for
the licensee relating to explorations,
development production and any
operations, in the surrendered
lands, as the Minister may require.
Oral reports 77. (1) A licensee shall report orally to the
Minister within twenty-four (24) hours:
(a) if a well shows the presence of
hydrocarbons; or
when a drill-stem test has been
carried out on a well from which
flows petroleum.
(b)
(2) Following the oral reports, written reports
prepared by the licensee must be submitted within seven
(7) days to the Minister.
(3) The written reports prepared under
paragraph (2) shall, in the case of a showing of
hydrocarbon presences, contain, inter alia, relevant
geological information and chemical analyses and in the
case of drill-stem tests, the report shall contain, inter
alia:
(a) relevant geological information;
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(b) conditions and results of drill-stem
tests;
(c) chemical and physical analyses;
(d) any deductions therefrom as to the
potential of the reservoir.
Access to Information 78. Inspectors and other duly authorized
representatives and auditors of the Government shall
have the right at all reasonable times to have access to
and to inspect, test and audit the works, equipment,
operations and financial books, records and registers of
any contractor relating to his activities under any licence
including the transportation and marketing of petroleum.
A licensee shall furnish to the inspectors and other duly
authorized representatives and auditors of the
Government who effect the inspection, testing or audit all
necessary assistance and adequate facilities for the proper
discharge of their duties.
Export of Data 79. A licensee shall not export any document or data
from Solomon Islands unless a duplicate or copy thereof
remains i n Solomon Islands. Notwithstanding the
foregoing, a licensee may, with the approval of the
Minister, which shall not be unreasonably withheld,
export magnetic tapes, core samples of other mineral
samples when necessary and shall return such samples or
tapes to Solomon Islands after completing evaluation.
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PART VII. MISCELLANEOUS
Inspection 80. (1) The Government may appoint inspectors
having authority to supervise petroleum operations, and
to ensure that these operations are carried out in
conformity with the applicable law; and conditions
stipulated in the exploration licence or the petroleum
agreement, as the case may be.
(2) The inspectors shall at all times have
access to exploration vessels, drilling platforms,
production facilities, installations for production of
electricity, shipment facilities and other installations, and
to all data pertaining to petroleum operations. The
Government may authorize any public official or other
person to exercise the powers of an inspector.
Offenses and Penalties 81.
any of the provisions of Regulations is guilty of an
offence; and any person guilty of an offense shall be
liable on conviction to a fine not exceeding ..........., and
in the case of a continuing offence to a further fine not
exceeding .........., for each day during which the
offence continues after conviction therefor.
A person who contravenes or fails to comply with
Definitions 82. In these Regulations, unless the context otherwise
requires,
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"Accounting Procedure" means the accounting
procedure contained in the relevant petroleum agreement.
"affiliated company" means any shareholder of the
licensee owning five per cent (5%) or more of its shares,
or any entity controlling, controlled by or under common
control with the licensee.
"applicable law" means the laws, regulations, decrees
and other instruments having the force of law, as the
same may be issued and in force from time to time, in
Solomon Islands.
"appraisal well" means an exploration well drilled for the
purpose of appraising the commerciality of the petroleum
accumulation within a trap on which a petroleum
accumulation found by a discovery well has been drilled.
"associated gas" means natural gas produced in
association with crude oil and separated therefrom.
"block" means a section of the surface of the earth
demarcated in accordance with regulation 3.
"calendar year" means a period of twelve (12) months,
according to the Gregorian Calendar, beginning on first
January and ending on the following thirty-first
December.
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“commercial field” means a petroleum field in the
Contract Area determined to be commercial in
accordance with the procedures stipulated in regulation
14 hereof.
“crude oil” means solid and liquid hydrocarbons under
normal temperature and atmospheric conditions and
includes condensates and distillates obtained from natural
gas.
“development area” means that portion of the licence
area which is subject to a petroleum development
licence.
“exploration” or “exploration operations” mean all
geological, geophysical and geochemical surveys and the
drilling of exploration wells which are carried out in the
licence area during the exploration period, for the
purpose of discovering petroleum-bearing traps, and shall
include any further exploration and relevant processing
and appraisal work, including economic and technical
feasibility studies, as may be carried out to determine
whether such traps constitute commercial fields.
“exploration period“ means the time period stipulated in
the licence, during which the licensee is to carry out
exploration operations;
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"exploration well" means a well, including a dry well,
discovery well or on appraisal well, which is drilled
during the exploration period for the purpose of
discovering or appraising a petroleum field.
"Government" means the Government of Solomon
Islands.
"Inspector" or "Chief Inspector" mean public officers
appointed under the Petroleum Act.
"licence" means a petroleum prospecting licence or a
petroleum development licence, or both, as the context
requires.
"licence area" means the area covered by a licence,
excluding any portions from time to time relinquished
pursuant to the provisions of the relevant petroleum
agreement.
"licensee" means a person granted a licence under the
Petroleum Act.
"Minister" means the Minister (for the time being)
charged with responsibility for petroleum affairs.
"natural gas" means all gaseous hydrocarbons, whether
produced in association with crude oil or from gas wells,
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and includes wet gas, dry gas and residue gas remaining
after the extraction of liquid hydrocarbons from wet gas.
"performance bond" means a bond for the satisfactory
performance of licensee's obligations pursuant to the
provisions of the relevant petroleum agreement.
"petroleum" means crude oil or natural gas, or a
combination of both.
"petroleum operations" means all exploration and other
activities contemplated and authorized under the
provisions of the relevant petroleum agreement.
"Petroleum Act" means the Petroleum Act, 1987.
"petroleum development licence" means a petroleum
development licence granted under the Petroleum Act.
"petroleum prospecting licence" means a petroleum
prospecting licence granted under the Petroleum Act.
"production operations" means operations carried for the
extraction, treatment, transport, storage and lifting of
petroleum and includes all works and activities connected
therewith.
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"Quarter" means a period of three (3) consecutive
months, according to the Gregorian calendar, starting on
the first January, first April, first July, or first October.
"sub-contractor" means an entity which provides any
services to the licensee in connection with petroleum
operations.
"work programme" means the annual plan for the
conduct of petroleum operations, prepared in accordance
with the provisions of the relevant petroleum agreement.
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