Chapter 156 – Petroleum (Production) Act

P E T R O L E U M ( P R OD U C T I O N )

CHAPTER 156

PETROLEUM (PRODUCTION) ACT To vest in the Government of Malta the property in petroleum and natural gas within Malta and to make provision with respect to the searching and boring for and getting of petroleum and natural gas, and for purposes connected with the matters aforesaid.

8th March, 1958 ACT IV of 1958, as amended by Emergency Ordinance VI of 1958;

Ordinances: VI of 1959, XXV of 1962; Act XV of 1965; Legal Notice 46 of 1965; Acts: XXXV of 1966, XX of 1969, LVIII of 1974 and XIII of 1983;

Legal Notice 410 of 2007; and Acts XXVI of 2014, XIV of 2015 and XXVIII of 2023.

Art. 1

Act.

Art. 2

The short title of this Act is the Petroleum (Production) In this Act unless the context otherwise requires: "applicant" means any entity that submits an application for the grant of a licence in accordance with this Act; "by-products" means the products derived from the processing of petroleum; "competent authority" means the Office of the Prime Minister of Malta, or any other body or person as the Minister may prescribe and designate as the competent authority for different purposes in terms of different provisions of this Act; "entity" means any natural or legal person or a group of such persons, including a limited liability company constituted in terms of the Companies Act, or a similar body corporate established or incorporated outside Malta, which applies for, is likely to apply for, or holds a licence pursuant to this Act; "exploration" means the search for petroleum by any appropriate method which may include drilling; "internal waters" shall have the same meaning as is assigned to it by article 2 of the Continental Shelf Regulations; "licence" means an authorisation granted pursuant to this Act; "Malta" shall have the same meaning as is assigned to it by article 124 of the Constitution of Malta and includes the seabed and subsoil of the submarine area within the internal waters and territorial waters of Malta; "Minister" means the Prime Minister of Malta and includes such other Minister, public officer or authority as may be authorised by him, from time to time, for any of the purposes of this Act; "petroleum" means all solid, liquid or gaseous hydrocarbons existing in their natural state, including crude oil or natural gasoline, natural hydrocarbon gases as well as all related minerals or substances produced in association with such hydrocarbons;

Short title.

Interpretation.

Amended by:

XV.1965.2;

XXXV. 1966.10;

XXV. 2000.36;

Substituted by:

XXVIII.2023.2.

S. L. 535.02.

PETROLEUM (PRODUCTION) "production" means the development and extraction of petroleum or any treatment in order to make it marketable and the storage and the transportation of the petroleum and its by-products to the loading installations for further disposal. Any treatment referred to in this definition shall not include refining;

Cap.. 226 Vesting of ownership of petroleum in Government of Malta.

Amended by:

VI. 1958.2;

XXV.1962.2,5;

XV.1965.3;

XIII.1983.5;

XXV. 2000.36;

L.N. 410 of 2007.

XIV. 2015.2;

XXVIII.2023.3. "prospection" means the attempt to locate petroleum in a specific area by any appropriate method other than drilling; "territorial waters" shall have the same meaning assigned to it by article 3 of the Territorial Waters and Contiguous Zone Act.

Art. 3

Provided that where the act constituting the offence subsists for more than one day, the Court may in addition impose a fine (multa) not exceeding ten thousand euro (€10,000) for each day during which such act subsists which fine (multa) shall also be applicable for the purposes of article 377(3) of the Criminal Code:

Provided further that all petroleum so extracted shall be forfeited to the Government of Malta and that nothing in this Act, howsoever referred to, shall be construed as imposing any penalty on any entity where in the course of lawful boring in search of water or of other lawful operations, petroleum is set free.

Provided that nothing in this Act shall be construed as conferring, or as enabling the Minister to confer, on any entity, whether acting on behalf of the Government of Malta or not, any right which he does not enjoy apart from this Act, to enter on or interfere with land.

P E T R O L E U M ( P R OD U C T I O N )

Art. 3A

The Minister shall retain the right to determine the areas in Malta for the exercise of the activities of prospecting, exploring and producing of petroleum.

Determination of the areas for the exercise of activities and refusal to allow access on grounds of national security.

Added by:

XXVIII.2023.4.

Art. 4

Provided that the Minister may impose conditions and requirements in the licence in connection with but not limited to national security, public safety, public health, security of transport, protection of the environment, protection of biological resources and of national treasures possessing artistic, historic or archaeological value, safety of installations and of workers, planned management of petroleum resources such as the rate at which petroleum is depleted or the optimisation of its recovery or the need to secure tax revenues.

Provided that the Minister may renew or extend the licence for such a time period as may be necessary for the proper conduct of the work obligations specified in the licence:

Provided further that the licensee shall not retain exclusive rights over the licensed area for longer than is necessary for proper performance of the licensed activities.

Licences to prospect for, explore for and produce petroleum.

Amended by:

VI. 1958.2;

XXV. 1962.2,5;

XV. 1965.4;

XXV. 2000.36.

Substituted by:

XXVIII.2023.5.

Powers of the Minister to make regulations.

Amended by:

VI. 1958.2;

XXV. 1962.2;

XV. 1965.5;

L.N. 46 of 1965;

XX. 1969.2;

XIII. 1983.5;

XXV. 2000.36;

L.N. 410 of 2007;

XXVI. 2014.3;

XIV. 2015.2.

XXVIII.2023.6.

PETROLEUM (PRODUCTION)

Art. 5

Provided that, in particular, but without prejudice to the generality of the foregoing, such regulations may prescribe: (i) the manner in which and the entities by whom applications for licences under this Act may be made; (ii) the fees to be paid on any such application; (iii) the conditions as to the size and shape of areas in respect of which licences may be granted; (iv) model clauses which shall, unless the Minister thinks fit to modify or exclude in any particular case, be incorporated in any such licence; (v) anything which is required or may be prescribed under this Act, and may provide for the minimum and maximum punishments, whether by way of fine (multa) or of imprisonment, to be applied in respect of any non-observance of any regulation made under this article:

Provided further that any punishment prescribed in the regulations made under this article shall not be less than a fine (multa) of ten thousand euro (€10,000) and shall not exceed a fine (multa) of two million euro (€2,000,000), or imprisonment which shall not P E T R O L E U M ( P R OD U C T I O N ) exceed a term of five years, or both such fine and imprisonment, in respect of any non-observance of any such regulation:

Provided further that where the act constituting the offence subsists for more than one day, the Court may in addition impose a fine (multa) not exceeding ten thousand euro (€10,000) for each day during which such act subsists which fine (multa) shall also be applicable for the purposes of article 377(3) of the Criminal Code:

Provided further that the Minister may establish different regulations for different kinds of licences and provide conditions that bind licencees to be financially liable for any prevention and remediation of any damage, including damage to the environment, caused by prospection, exploration and production of petroleum in Malta.

Art. 5A

5A. (1) The Government of Malta or any entity in which the Government of Malta has majority shareholding, shall have the right to participate in the activities of prospection, exploration and production of petroleum in accordance with the licences granted under this Act.

Provided that: (a) the legal person or the Government shall not be party to information nor exercise any voting rights on decisions regarding sources of procurement for entities; (b) the legal person or the Government in combination with any entity shall not exercise a majority voting right on other decisions; and (c) any vote by the Government or the legal person, shall State participation in the activities of prospecting for, exploring for and producing petroleum.

Added by:

XXVIII.2023.7.

PETROLEUM (PRODUCTION) be based exclusively on transparent, objective and non-discriminatory principles and shall not prevent the relevant management decisions of the entity from being based on normal commercial principles.

Provided that, the option to oppose a decision shall be exercised in a non-discriminatory manner, particularly regarding investment decisions and sources of supply of the holders of the licences, unless they are in breach of national legislation or international law.

P E T R O L E U M ( P R OD U C T I O N )

Art. 5B

5B. The Minister shall publish and communicate an annual report to the European Commission which shall include information on the geographical areas which have been opened for prospection, exploration and production, licences granted, entities holding licences and the composition thereof and the estimated reserves contained in these areas provided that any information of a commercially confidential nature shall not be published.

Publication and communication of the annual report.

Added by:

XXVIII.2023.7.

Art. 5C

No holder of a licence may transfer a licence or assign rights arising from a licence to another entity, except upon written consent of the Minister, which may be granted if:

Transfer of a licence or assignment of rights arising from a licence.

Added by:

XXVIII.2023.7. (a) it does not compromise national security; (b) the Minister is satisfied that the entity to whom the licence would be transferred or the rights arising from a licence would be assigned has sufficient technical knowledge, experience and financial resources to secure the proper exercise of the activities of prospecting for, exploring for and producing petroleum; (c) the entity to which the licence would be transferred or the entity to which the rights arising from a licence would be assigned undertakes to comply with such other conditions and requirements as the Minister may deem proper to impose.

Art. 6

When a declaration is so made the Lands Authority may grant, under sub-article (1) of article 37 of the Government Lands Act or any other law amending or substituting the said sub-article, such authorisation as may reasonably be required by the applicant.

Amended by:

VI.1959.3;

L.N. 46 of 1965;

LVIII.1974.68.

XXVIII.2023.8.

PETROLEUM (PRODUCTION) substituting that Act, and when a declaration is so made the Lands Authority may in due course proceed to acquire the land under the provisions of that Act or of any other law as aforesaid.

Applicability to the continental shelf.

Added by:

XXVIII.2023.9.

Art. 7

All relevant provisions of this Act shall apply mutatis mutandis to the continental shelf as defined in article 2 of the Continental Shelf Act.

Designation of competent authorities.

Added by:

XXVIII.2023.9.

Art. 8

For the purposes of the implementation of the provisions of this Act and regulations made thereunder, the Minister may designate any person as a competent authority for the purposes of the implementation and for exercise of any rights and duties therein.

P E T R O L E U M ( P R OD U C T I O N )

Art. 9

Any reference to the "Petroleum (Production) Act" in any licence, contract or agreement relating to the prospection, exploration and production of petroleum, to which the Government of Malta is a party, which was granted prior to the coming into force of this Act, shall continue to be governed and regulated in accordance with the Petroleum (Production) Act as it was in force prior to the Petroleum (Production) (Amendment) Act.

Transitory provision.

Added by:

XXVIII.2023.9.

Act No. XXVIII of 2023.