The Oil & Gas Act 1998 provides for five different types of licenses: Petroleum Prospecting Licenses (PPLs) for exploration; Petroleum Development Licenses (PDLs) for petroleum developments; Petroleum Retention Licenses (PRLs) for discovered gas reserves which are considered sub-economic; Pipeline Licenses (PLs); and Petroleum Processing Facility Licenses (PPFLs).
Features of these licenses are as follows:
1. Petroleum Prospecting Licenses
Term: 6 years, plus one 5 year extension
Relinquishment obligations: 50% of initial size, less the area of any PRLs, on extension
Maximum size: Usually 60 graticular blocks, each approximately 9km by 9 km
Application fee: K10, 000
Annual fees: K500 for each graticular block on the anniversary of the license.
In the case where PPL is granted by extension:
(1) K1, 000 per graticular block in the first year
(2) K1, 500 per graticular block in the second year
(3) K2, 000 per graticular block in the third year
(4) K3, 000 per graticular block in the fourth year
(5) K4, 000 per graticular block in the fifth year
Security deposit: A bond in the form of either a cash deposit or bank guarantee of up to K1, 000,000.00 will be determined at the Department of Petroleum and Energy discretion
Surrender entitlement: Surrender without penalty permitted provided license conditions have been met to that point
Work commitment: Negotiable
2. Petroleum Development Licenses
Term: 25 years, plus normally one 20 year extension or further 20 year extensions reasonably required to recover the maximum amount of petroleum
Application fee: K50, 000
Annual fee: K100, 000
3. Petroleum Retention Licenses
Term: 5 years, plus two 5 year extension
Relinquishment: None required
Maximum size: May only include blocks in which a gas held on field lies or adjacent blocks required for better administration
Application fee: K10, 000
Annual fees: K 30,000
Work commitment: Negotiable
4. Pipeline Licenses
Term: 25 years, plus normally one 20 year extension or further 20 year extension or lesser periods as the Minister thinks fit
Application fee: K50, 000
Annual fees: 0 to 10 km – K 10, 000
10 to 100 km – K 1, 000 per km
100 km or greater – K 100, 000
5. Petroleum Processing Facility Licenses
Terms: License would remain in force until cancelled by the Minister under section 138 of the Act or surrendered by the licensee under section 137 of the Act.
Application fee: K50, 000
Annual Fees: K100, 000