The Petroleum Licensing (Production) (Seaward Areas) Regulations 2008

Last updated: 24 October 2020

The Regulations were passed for the Petroleum Act 1998 and prescribe the model clauses to be incorporated in petroleum production licences for offshore areas. They were amended by the Petroleum and Offshore Gas Storage and Unloading Licensing (Amendment) Regulations 2017

(Effective Date: 15 September, 2017). The Oil and Gas Authority (OGA), where necessary, may modify or exclude them in particular cases.

Under clause 2, the Oil and Gas Authority (created under the Energy Act of 2016) grants to the licensee exclusive licence to explore for and exploit petroleum in the offshore area.  The OGA, however, retains the right to grant a methane drainage licence in respect of the whole or any part of the licensed area. Furthermore, the licence does not affect the exercise of any rights granted under any such methane drainage licence.

Clause 23 provides for avoidance of harmful methods of working. For example, under clause 23(1), the licensee is required to maintain all apparatus and appliances and all wells in the licensed area in good repair and condition. Furthermore, they must execute all operations in a proper and workmanlike manner in accordance with methods and practice customarily used in good oilfield practice, for instance, to control the flow and to prevent the escape or waste of petroleum discovered in or obtained from the licensed area.

Clause 23(3) prohibits flaring and venting of any gas except with the consent in writing of the OGA and in accordance with the conditions, if any, of the consent. The application for consent must be made in writing to the OGA and must specify the date on which the licensee proposes to begin the flaring or venting. Clause 23(6) grants the licensee a right of hearing (about the technical and financial factors) before the OGA can decide to withhold consent or to grant it subject to conditions.

Under clause 23(7), consent shall not be required for any flaring which, in consequence of an event which the licensee did not foresee in time to deal with it otherwise than by flaring, is necessary in order to remove or reduce the risk of injury to persons in the vicinity of the well in question; or to maintain a flow of petroleum from that or any other well. However, the licensee must inform the OGA of any flaring or venting and, in case of the flaring is being conducted to maintain a flow of petroleum, stop that flaring upon request from the competent authority.

The model clauses also require the licensee to notify the OGA of any event causing the escape or waste of Petroleum. Furthermore, they must set up security of funds be able to discharge any liability for damage attributable to the release or escape of petroleum, as may be required.

Other clauses relate to the inspection of records, furnishing of information and rights of access to the licensee's installations or equipment for purposes of examination and enforcement, as well as power to require the plugging and abandonment of a suspended well.

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