The Hydrocarbons Law specifies that the state owns all national hydrocarbon resources. Rights to carry out petroleum exploration or exploitation operations may be granted to local or foreign legal entities selected through a competitive bidding process based on technical and financial criteria established by the Ministry of Hydrocarbons and approved by the Council of Ministers. Such rights are granted according to a petroleum contract. Local content requirements are also expressly included under this law.
This legislation establishes a general regime for hydrocarbons, defining that the Ministry of Hydrocarbons is responsible for the development, management and implementation of this policy. It also defines that the national oil company (SONAHYDROC – La Société Nationale des Hydrocarbures) is entitled to a compulsory and non-assignable participation of at least 20 % in all oil and gas developments.
This law states that operators shall present oil and gas development plans, including provisions related to the use of associated natural gas, subject to monitoring by competent authorities. Also, the state may enter into specific agreements with legal entities that have sufficient technical and financial capacities for the development of projects related to the use of associated natural gas.
The Hydrocarbons Law has further provisions on royalties and taxes, enforcement powers and pertaining sanctions. It does not refer methane but institutes the obligation of including environmental provisions in petroleum contracts and, in particular, the requirement of conducting environmental and social impact assessment studies and elaborating environmental management plans.
Moreover, Section 3 of this law deals with gas flaring, indicating that natural gas resulting from the exploitation of hydrocarbons should be used, as far as possible, for sale, re-injection or for other commercial or industrial uses. Gas flaring is generally prohibited but may be authorised on an exceptional basis, as part of a test, one-off operation or in assisted recovery.