ARRANGEMENT OF SECTIONS

PART I
PRELIMINARY

SECTION

PART II
PERMITS, LICENCES AND LEASES

PART III
ANCILLARY RIGHTS

PART IV
MISCELLANEOUS AND GENERAL

CHAPTER 219

PETROLEUM

[Assent 10th June, 1971]
[Commencement 7th September, 1978]

"alienated land" means land the petroleum rights in which are vested in the Government under this Act but the surface of which has been alienated by the Crown at any time, whether such surface has revested in the Crown or not;

"block" means an area of one hundred square miles, in the shape of a square with each side ten miles in length, individually identifiable on a base map of The Bahamas approved by the Minister;

"commercial discovery" in relation to petroleum mining means a discovery of petroleum which, after taking into consideration the quality and estimated quantity of petroleum reserves; the site and depth at which it is located; the development/production investment and costs required; the expected petroleum production rates and the prevailing fair market price of petroleum, would result in a satisfactory and profitable exploitation. A commercial discovery may consist of one reservoir or a group of reservoirs;

"Court" means the Supreme Court;

"functions" include powers and duties;

"Government" means the Government of The Bahamas;

"land" means land other than a submarine area includes all marshes and lands underlying lakes and also all coastal marine swamp land and lands underlying all bodies of water connected with the sea and extending inland;

"lease" means a lease to mine petroleum granted: accordance with the provisions of this Act and the regulations;

"lessee" means a company to which a lease under this Act is granted and its assignees;

"licence" means a licence to explore and prospect for petroleum granted in accordance with the provisions of this Act and the regulations;

"licensee", means a company to which a licence under this Act is granted and its assignees;

"mile" means a nautical mile of six thousand and eighty linear feet;

"Minister" means the Minister responsible for Petroleum;

"permit" means a non-exclusive right to carry out anywhere within the land, territorial waters and the continental shelf of The Bahamas (continental shelf here having the same meaning as in the Continental Shelf Act) surface and geological studies and airborne geophysical surveys of a regional nature, including seismic, gravity or other types of surface geophysical surveys that are not in the opinion of the Minister harmful to aquatic life;

"petroleum" includes any mineral oil or related hydrocarbon and natural gas existing in its natural condition in strata and bitumen and asphalt and non-hydrocarbon substances but does not include coal or bituminous shales or other stratified deposits from which oil can extracted by destructive distillation;

"prescribed" means prescribed by regulations made under this Act;

"regulations" mean regulations made under section 34 for the time being in force;

"submarine area" means land underlying the sea waters surrounding the coast of The Bahamas below the high water mark of the sea at ordinary spring tides, including the seabed and subsoil situated beneath the territorial waters and the continental shelf of The Bahamas (continental shelf here having the same meaning as in the Continental Shelf Act);

"unit" means an area of four square miles, in the shape of a square with each side two miles in length, individually identifiable on a base map of The Bahamas approved by the Minister.

(2) Unless the contrary intention appears, references in this Act to a section are references to a section of this Act, and references in a section to a subsection are references to a subsection of that section.

(2) Any person who contravenes the provisions of subsection (1) shall be guilty of an offence and liable on summary conviction to a fine not exceeding ten thousand dollars or to imprisonment for a term not exceeding one year or to both such fine and imprisonment and, in the case of a continuing offence, to a further fine of one thousand dollars for every day during which the offence continues.

(2) An application for a licence or lease may be made by two or more persons jointly, if the agreement between the parties thereto as to the proposed joint operation is submitted with such application.

(2) Where there is a commercial discovery within the licensed area the licensee shall be entitled on application to the grant of a lease in accordance with the provisions of this Act and the regulations and such lease shall contain the terms and conditions agreed between the Governor-General and the licensee at the time of the grant of the licence.

(3) The grant of any licence or lease shall be subject to the rights of the owners of the surface of the land or submarine area in respect of which such licence or lease is granted.

Provided that where the holder of a licence or lease executes an instrument of assignment or transfer of such licence or lease or any rights or obligations thereunder without having obtained such consent, the Governor-General shall be entitled to cancel the licence or lease but without prejudice to the continuing validity of any obligations outstanding thereunder.

(2) An application by the holder of a licence or lease for consent to the assignment or transfer of such licence or lease or any rights or obligations thereunder shall be made in such form as may be prescribed, to the Minister for submission to the Governor-General.

(2) An application for a permit may be made by two or more persons jointly, if the agreement between the parties thereto as to the proposed joint operation is submitted with such application.

(3) A permit granted under this Act shall not be assigned without the previous consent in writing of the Minister.

(4) The grant of any permit shall be subject to the rights of the owners of the surface of the land and the submarine area in respect of which such permit is granted.

(2) Prior to the cancellation of a licence or lease under subsection (1) the Governor-General shall in writing inform the licensee or lessee of the grounds on which he considers that the licence or lease ought to be cancelled and require the licensee or lessee to show cause within the time specified why the licence or lease should not be cancelled.

(3) The Governor-General may, after he has given notice under subsection (2), cancel the licence or lease forthwith-

(4) Every decision of the Governor-General under subsection (3) shall be final.

(5) Where a notice is given by the Governor-General under subsection (2) in a case referred to in paragraph (ii) or (iii) of subsection (1) and the licensee or lessee disputes the grounds specified by the Governor-General in such notice, the licensee or lessee shall, within the time specified in the notice, notify the Governor-General in writing of the dispute and the matter shall in accordance with the terms of the licence or lease be referred to arbitration.

(6) Where a matter is referred to arbitration under subsection (5) and an award is stated in accordance with such reference, the Governor-General shall, subject to the Arbitration Act, act in accordance with the award of the arbitration.

(7) The cancellation of a licence or lease under this section shall not prejudice the continuing validity of any obligations outstanding thereunder and in such case the Governor-General shall cause notice of the fact, in addition to being published in the Gazette, to be sent to the licensee or lessee by registered post to its registered office.

Provided that the provisions of this subsection in relation to the grant of a permit, shall not apply to a scientific research organisation approved by the Minister.

(2) A company may be granted a licence or lease severally or jointly with another company:

Provided that a licence or lease shall not be granted to a company which is a member of, or is directly or indirectly owned or controlled by, another company to which a licence or lease has already been granted under this Act or which is itself applying for such a licence or lease.

(2) Every licensee or lessee shall permit the Minister or any person authorised in that behalf by the Minister at all reasonable times to inspect such records, books and accounts.

(2) A company shall not be granted licences in excess of fifty blocks (including in such aggregate the proportionate interest in any block held by such company under a licence jointly with another company:

Provided that the Governor-General may, after a procedure of competitive bidding in accordance with then regulations, grant to any company such larger maximum number of licences in excess of fifty blocks as the Governor-General may think fit.

(2) A company shall not be granted leases in respect of an area-

Provided that the Governor-General may, after a procedure of competitive bidding in accordance with the regulations, grant to any company such larger maximum area than that specified in paragraphs (b) and (c) but such area shall not exceed seven hundred and fifty units.

(2) Royalties payable under subsection (1) shall be paid at such intervals as the Minister may determine.

(3) All petroleum that is proved to the satisfaction of the Minister to have been used by the licensee or lessee within the licensed or leased area for the purpose of carrying on drilling or production operations or of pumping or transporting to field storage or refineries shall be free of royalty.

(4) From the amount of royalties payable in respect of any one year of the term of a licence or lease there shall be deducted the amount of the certain yearly rental prescribed and actually paid in respect of that year for the area under the respective licence or lease.

(5) For the purposes of subsection (1) the selling value of any petroleum shall be such value as may be determined by mutual agreement between the Minister and the licensee or lessee, as the case may be, and, in the absence of such agreement, such value shall be the average selling price of petroleum prevailing in the market.

(2) In this Act "ancillary right" means any facility, right or privilege required by a licensee or lessee in order that petroleum may be searched for, bored for, gotten, stored, treated, converted or carried away, and includes-

(2) For the purposes of this Act, a person whose concurrence is necessary for the exercise of an ancillary right shall be deemed to be a person having power to grant the right, or a person from whom the right must be obtained, as the case may be.

(2) Any application under this section shall set forth the circumstances alleged to justify the grant of the right and shall be in such form and be accompanied by such information verified in such manner as the Minister may direct.

Provided that where it is alleged that the right in question cannot be obtained by reason of any person not having the necessary powers of disposition or having unreasonably refused to grant it or having demanded terms that are unreasonable, the Minister shall not refer the application to the Court without first having communicated with that person.

(2) The Rules Committee constituted under section 75 of the Supreme Court Act shall make rules of court prescribing the procedure to be followed, the forms to be used and the fees to be paid in relation to references to the Court under section 22.

(2) The Court may impose as a condition of the grant of an ancillary right that any compensation to be paid in respect thereof shall be paid, or that security therefor to the satisfaction of the Court shall be furnished, before the right is exercised.

(3) Where the person to whom any such compensation is payable cannot be found or ascertained such compensation shall be paid into Court.

(2) Such compensation shall, in every case, be assessed on the basis of what would be fair and reasonable between a willing grantor and a willing grantee having regard to the conditions subject to which the right is or is to be granted.

all derricks, piers, survey-marks or any other installations erected in any submarine area or land included in a licence or lease.

(2) A licensee or lessee shall be absolutely liable for any loss, damage or injury which may be caused by the licensee or lessee or by the agents or servants of the licensee or lessee resulting from any such pollution.

(3) Full details of any spill or leakage of petroleum, mud or any other fluid or substance shall be recorded in writing by the licensee or lessee and shall forthwith be reported to the Minister.

(4) Where a licensee or lessee fails to take any step or do any thing which it is required to take or do by subsection (1) or (3), the Minister shall have the right to take that step or do that thing and to recover from the licensee or lessee any costs or expenses reasonably and necessarily incurred by him on that account.

(5) Any person who contravenes or fails to comply with the provisions of subsection (1) or (3) shall be guilty of an offence and liable on summary conviction to a fine not exceeding one hundred and twenty thousand dollars or to imprisonment for a term not exceeding two years or to both such fine and imprisonment, and in the case of a continuing offence, to a further fine of five thousand dollars for every day during which the offence continues.

Provided that it shall be a condition precedent to such exemption that-

(2) Regulations made under subsection (1) may notwithstanding the provisions of section 25 of the Interpretation and General Clauses Act, provide for the imposition of a fine not exceeding five thousand dollars for any contravention of, or failure to comply with, the provisions of the regulations.

(2) Notwithstanding subsection (1), any oil exploration licence or any oil prospecting licence which was in force under section 7 of the Petroleum Act, 1945 immediately before the date of commencement of this Act and any provision of the said Act or of any regulations made thereunder and in force immediately before that date regulating the interpretation, enforcement or control of any such licence shall continue in full force and effect until the expiry of such licence according to its tenor, as if this Act had not been passed.