PETROLEUM RESOURCES ACT

Arrangement of Sections

1. Short title.

PART I

OWNERSHIP OF PETROLEUM RESOURCES

2. Ownership of petroleum resources to vest in state.

3. State to develop petroleum resources in accordance with international practise.

4. Agreements relating to exploration of petroleum resources.

PART II

PETROLEUM RESOURCES DEVELOPMENT COMMITTEE

5. Establishment of the Petroleum Resources Development Committee.

6. Powers and functions of the PRDC.

PART III

Petroleum RESOURCES AGREEMENT, EXPLORATION BLOCKS AND DEVELOPMENT LICENCES

7. Restrictions on conduct of Petroleum operations.

8. Applications to enter into agreement in respect of exploration blocks.

9. Petroleum Resources Agreement.

10. Development Licences for recovery of petroleum resources.

11. Conditions to be attached to Development Licence.

12. The PRDC to notify Contractor of contravention of conditions of Development License.

13. Suspension or cancellation of Development License.

14. Rights of Contractor under Development licence.

15. Transfer of participating interest in a Development License.

16. Licensing of service sub-contractors.

17. Liability of persons participating interest in development license.

18. Unit Development.

19. Acquisition of property for contractors.

PART IV

FUNCTIONS OF THE SECRETARIAT

20. The Secretariat.

21. Secondment of the officer in the public service.

PART V

FISCAL PROVISIONS

22. Terms as to production sharing.

23. Adjustment of term in case of increases in taxes etc.

24. Determination of profits and income.

25. Petroleum Resources Royalty.

26. Exemptions from customs duties.

PART VI

GENERAL

27. Regulations.

28. Powers of entry.

29. Offences.

30. Offences by bodies of persons.

31. Amendment of Act No. 28 of 1961.

32. This Act to prevail of other law.

33. Sinhala text to prevail in case of inconsistency.

34. Interpretation.

26 of 2003.

AN ACT to provide for the exploration and recovery of Petroleum Resources in Sri Lanka and for the regulation of the same; to repeal certain provisions of the Ceylon Petroleum Corporation, Act, No. 28 of 1961; and to provide for matters connected therewith or incidental thereto.

[Date of Commencement: 9th September, 2003]

1. Short title.

This Act may be cited as the Petroleum Resources Act.

PART I

OWNERSHIP OF PETROLEUM RESOURCES

2. Ownership of petroleum resources to vest in state.

Absolute ownership of all petroleum resources occurring naturally within—

(a) the sub-surface of the land area;

(b) the internal waters, historic waters, territorial sea, contiguous zone, continental margin and the exclusive economic zone,

of Sri Lanka shall vest in the State, notwithstanding any right of ownership or otherwise which any person may have to the soil under which such petroleum resources are found.

3. State to develop petroleum resources in accordance with international practise.

The State shall take all steps possible to ensure that the exploration and exploitation of petroleum resources are, carried out with investor participation adopting resources in internationally recognised engineering practices and proven international technology.

4. Agreements relating to exploration of petroleum resources.

(1) The Cabinet of Ministers may delegate to the Minister the power to enter into agreements, for and on behalf of the Government of Sri Lanka, for promoting the survey, resources, exploration and exploitation of petroleum resources with any investor.

(2) Every such agreement shall be between the Government of Sri Lanka and a person or body of persons, for the implementation of the Petroleum Resources Agreement entered into with the Government of Sri Lanka, in terms of section 7.

PART II

PETROLEUM RESOURCES DEVELOPMENT COMMITTEE

5. Establishment of the Petroleum Resources Development Committee.

(1) There shall be established a Committee known as the petroleum Resources Development Committee (hereinafter referred to as the "PRDC”), which shall be charged with the responsibility for the effective implementation of the provisions of this Act.

(2) The Committee shall be appointed by the Minister and shall consist of—

(a) the Secretary to the Ministry of the Minister in charge of the subject of Petroleum Resources Development, who shall be the Chairman;

(b) the Secretary to the Ministry of the Minister in charge of the subject of Power;

(c) the Secretary to the Ministry of the Minister in charge of the subject of Energy;

(d) the Secretary to the Ministry of the Minister in charge of the subject of Finance;

(e) the Secretary to the Ministry of the Minister in charge of the subject of Environment;

(f) the Secretary to the Ministry of the Minister in charge of the subject of Natural Resources;

(g) the Secretary to the Ministry of the Minister in charge of subject of Fisheries;

(h) the Secretary to the Ministry of the Minister in charge of the subject of Ocean Resources;

(i) the Secretary to the Ministry of the Minister in charge of the subject of Defence;

(j) the Chairman, Board of investment of Sri Lanka established under the Sri Lanka Board of Investment Law, 4 of 1978;

(k) a nominee of the Ministry of the Minister in charge of the subject of Policy Development and Implementation; and

(l) a nominee of the Minister in charge of the subject of Petroleum Resources Development who shall be a person possessing the necessary qualifications and experience in connection with petroleum resources development.

(3) Where two or more of the subjects specified in sub-paragraphs (a) to (7) of subsection (2) are assigned to or remain in the charge of, one Minister, then there shall be only one representative nominated by the Minister in respect of such subjects.

(4) The persons appointed under paragraphs (k) and (l) of subsection (2), shall have no commercial interest in the development of petroleum resources in Sri Lanka.

(5) The PRDC shall be assisted by a Secretariat headed by the Director-General of Petroleum Resources (hereinafter referred to as the "Director-General”).

6. Powers and functions of the PRDC.

The powers and functions of the PRDC shall be—

(a) to formulate policies and prepare plans aimed at PRDC promoting the development of Petroleum Resources in Sri Lanka;

(b) to call for bids and assist in the evaluation of any applications received in response to such bids, received from any investor who intends to enter into Petroleum Resources Agreements in respect of defined Exploration Blocks and to determine whether the applicants fulfill the prescribed financial and technical qualifications, Petroleum Resources Act, No. 26 of 2003;

(c) to prepare model Petroleum Resource Agreements;

(d) to assist in the negotiations being earned out, for and on behalf of the State for agreement as to the terms to be incorporated in a Petroleum Resources Agreement and to submit the same for execution as provided in section 4;

(e) to appoint a nominee who will assist in the negotiations being carried out with a view to finalising a Petroleum Resources Agreement;

(f) to maintain registers, maps and other records in respect of all exploration blocks and areas covered by Development Licences issued under this Act;

(g) to cause to be collected, compiled, analysed and published, geological, geophysical, engineering and economic data pertaining to the available petroleum resources of Sri Lanka; and to ensure the application of the law relating to intellectual property to the data so collected;

(h) to cause to be collected and stored, geological samples and to permit their removal from and return to, Sri Lanka for purposes of technical evaluation;

(i) to issue licences in terms of this Act and to cancel, suspend, vary or amend the same;

(j) to suspend or cancel Development Licenses in terms of section 13 hereof;

(k) to approve assignments or transfers of a Contractor's Participating Interest in a Development Licence issued in terms of the Act, on such conditions as are reasonable, having regard to the purposes of this Act;

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