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Regulation Num. 2/2020, on Petroleum Operations in Equatorial Guinea

Regulation Num. 2/2020, on Petroleum Operations in Equatorial Guinea

Regulation Num. 2/2020, dated 15 June 2020, on Petroleum Operations in Equatorial Guinea.

The Ministry of Mines and Hydrocarbons (“MMH”) recently approved Regulation Num. 2/2020, dated 15 June 2020, on Petroleum Operations, revoking the previous regulation approved by Ministerial Order Num. 4/2013, dated 20 June 2013.

The purpose of this Regulation is to define and establish the procedures and standards of action to be observed in the conduct of Petroleum Operations in Equatorial Guinea, which will cover exploration, exploitation, evaluation, development, transport, distribution, storage, dismantling, refining, petrochemicals and marketing, as well as other related activities under the Hydrocarbons Law carried out by Contractors, Licensees and their Associates with them, as well as the measures to be adopted in case of non-compliance.

The new regulation maintains many provisions of the old regulation; therefore, we only highlight the main changes adopted:

Validity of the contracts

The approval of this Regulation will not change the validity of the contracts executed before its entry into force and/or the validity of the measures adopted in accordance with the terms of previous contracts.

– New concepts

o Marginal Field – a field in which 90% of its proven hydrocarbon reserves have been produced.
o Mature Fields – those that have reached the maximum peak of their production and have entered a declining stage, reaching their economic limit.
o Canteen – shallow hole that surrounds the well head, generally cubic. It allows the manipulation of the lower valves of the Head and the BOP.
o Subcontractor – a Person or a company that executes a contract to perform part or all of the obligations of the contract of a Contractor or other Subcontractor (1).

– Exploration of Marginal Fields, Deep and Ultra-deep Waters and Mature Fields

For the award of these contracts and during their validity, preference will be given to the participation of operating companies in the hydrocarbons’ sector, as well as national companies that, under equal conditions, demonstrate experience and technical, administrative, operational and financial capacity, with the participation of GEPetrol.

– Mature Fields:

The MMH will transfer to the Contractor the right to use the assets and infrastructure that are in the contract area, in accordance with the Inventory and Asset Valuation that is prepared. The contracts will have a duration of up to ten (10) years from the effective date thereof, and will be renewed every five (5) years, after study and assessment by the Ministry.

– Refining, petrochemical and marketing activities

The MMH may now directly carry out refining, petrochemical and marketing activities -i.e., mid and downstream activities- in association with private companies or through GEPetrol or SONAGAS.

– Exploration and Production (“E&P”) Onshore

The regulation introduces a new chapter which states the requirements for onshore operations.

– Customs

The MMH will assist Contractors and Subcontractors in the necessary procedures to use a granted custom exemption.

– Local Content

Taking into account Ministerial Order Num. 1/2020, dated 13 April 2020, issued by the MMH: if there are no Equatorial Guinea nationals with the required and proven experience/qualifications for a given job position, the period of provision of services by expatriate professionals is limited to 3 years.

Companies that carry out activities in the Hydrocarbons’ Sector will finance Social Projects annually, in the following terms:

                                                 Type of company                                    Annual contribution
Contractors                                        It will be as stipulated in the Contract
Subcontractors                    1% of the total value of the contract or contracts in Equatorial Guinea

 

The MMH will be responsible for choosing the Social Projects to be carried out each year and the company that will execute them.

– Penalties

Coordination between the MMH and the Presidency to that end is foreseen “when appropriate” (without further details on this issue).

– Petrochemical Operations

The new Regulation now includes the Petrochemical Operations that was not defined in the previous Regulation, being a mandatory requirement obtaining a license issued by the MMH before the beginning of said operations.

 

(1) Defined as “Associate” in the former Petroleum Operations’ Regulations

 

 

 

 

 

The contents of this publication are based on our knowledge and interpretation of current law and practice which are likely to
change over time. The publication is provided for information purposes only and does not constitute professional advice of any kind.
The information provided in the publication should not be used as a substitute for consultation with professional advisers. Before
making any decision, taking any action, or refraining from taking any action, the client should first consult a professional adviser who
has been provided with the pertinent facts relevant to the client’s particular situation. No responsibility for any loss occasioned
to any person acting or refraining from acting as a result of any material in the publication can be accepted by LI&P, the author,
copyright owner or publisher or any of their related entities, partners, directors, employees, agents or subcontractors.

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