Petroleum Concession Agreement (Ghana)
Petroleum Concession Agreement
This Petroleum Concession Agreement (this "Agreement") is entered into on [Agreement Date] between:
THE REPUBLIC OF GHANA, acting through the Ghana National Petroleum Corporation (GNPC), represented by [GNPC Representative], and the Petroleum Commission established under the Petroleum Commission Act 2011 (Act 821) (collectively, "the State"); and
THE CONTRACTOR: [Contractor Name], a company registered under the Companies Act 2019 (Act 992) with registration number [Contractor Reg Number], having its registered office at [Contractor Address] ("the Contractor").
This Agreement is made pursuant to the Petroleum (Exploration and Production) Act 2016 (Act 919) and the Petroleum Commission Act 2011 (Act 821). The laws of the Republic of Ghana govern this Agreement.
Recitals
WHEREAS petroleum in the ground within the territory of Ghana is vested in the Republic of Ghana pursuant to Section 1 of the Petroleum (Exploration and Production) Act 2016 (Act 919);
AND WHEREAS the Petroleum Commission has the power to grant petroleum licences and to regulate upstream petroleum operations in Ghana under Act 921;
AND WHEREAS the Contractor has the technical capability and financial resources to undertake petroleum exploration and development operations within the Contract Area;
NOW THEREFORE the parties agree as follows.
1. Contract Area
The State hereby grants to the Contractor the exclusive right to explore for, develop, and produce petroleum within the contract area known as [Block Name], a [Block Location] block with an area of approximately [Contract Area km²] square kilometres, as described in Schedule 1 to this Agreement (the "Contract Area").
The Contractor's rights under this Agreement are subject to compliance with Act 919, Act 821, the Petroleum (Local Content and Local Participation) Regulations 2013 (LI 2204), and all other applicable laws of Ghana.
2. Exploration Period and Work Programme
The initial exploration period shall be [Exploration Period] from the Effective Date of this Agreement, subject to the Contractor's right to extend the exploration period in accordance with Act 919.
During the initial exploration period, the Contractor shall perform the following minimum work obligations: [Minimum Work Obligation].
The minimum expenditure commitment for the initial exploration period is [Minimum Expenditure]. If the Contractor fails to fulfil the minimum work obligations, it shall pay to GNPC the unspent balance of the minimum expenditure commitment.
3. Royalties and GNPC Participation
The Contractor shall pay royalties to the Republic of Ghana at the rate of [Royalty Rate] of gross petroleum production from the Contract Area, as prescribed under Act 919. Royalties shall be paid to the Ghana Revenue Authority (GRA) in the manner and at the times specified under the Income Tax Act 2015 (Act 896).
GNPC holds a carried interest of [GNPC Carried Interest] in the Contract Area during the exploration phase. Upon a commercial discovery, GNPC shall have the right to acquire an additional participating interest on the terms agreed between GNPC and the Contractor in accordance with Act 919.
Petroleum income tax is payable by the Contractor at the applicable rate under the Income Tax Act 2015 (Act 896), administered by the Ghana Revenue Authority (GRA).
4. Local Content
The Contractor shall comply with all local content obligations prescribed under the Petroleum (Local Content and Local Participation) Regulations 2013 (LI 2204), including preference for Ghanaian goods and services, employment and training of Ghanaian nationals, and submission of annual local content plans to the Petroleum Commission.
5. Environmental Obligations
Before commencing petroleum operations within the Contract Area, the Contractor shall obtain an environmental permit from the Environmental Protection Agency (EPA) under the Environmental Protection Agency Act 1994 (Act 490) and shall comply with all Petroleum Commission health, safety, and environmental guidelines applicable to petroleum operations in Ghana.
6. Governing Law and Dispute Resolution
This Agreement is governed by the laws of the Republic of Ghana, including Act 919, Act 821, and the Contract Act 1960 (Act 25).
Any dispute arising out of or in connection with this Agreement that cannot be resolved by senior management negotiation within thirty (30) days shall be referred to [Dispute Resolution Forum] for final resolution.
Signatures
IN WITNESS WHEREOF the parties have executed this Petroleum Concession Agreement on the date first written above.
For and on behalf of the Republic of Ghana / GNPC
________________
Signature
For and on behalf of the Contractor
________________
Signature
What Is a Petroleum Concession Agreement (Ghana)?
A Petroleum Concession Agreement in Ghana governs the relationship between the parties by fixing what each must do.
Ghana operates a common law legal system, and petroleum concession arrangements are further regulated by the Petroleum Commission Act 2011 (Act 821), which established the Petroleum Commission as the upstream petroleum sector regulator responsible for issuing licences, monitoring operations, and enforcing compliance. Section 1 of the Petroleum (Exploration and Production) Act 2016 (Act 919) vests ownership of petroleum in the ground in the Republic of Ghana, meaning that no private party may explore for or produce petroleum without a valid petroleum agreement and licence issued under Act 919.
Ghana's upstream petroleum sector is structured around three principal agreement types: the Petroleum Concession Agreement (also known as a Petroleum Licence), the Petroleum Contract (a form of production sharing arrangement), and hybrid variants combining elements of both. The Petroleum Concession Agreement grants the contractor full title to the petroleum produced after payment of royalties and taxes, distinguishing it from production sharing contracts where the state retains title until profit petroleum is allocated. The Ghana Revenue Authority (GRA) administers petroleum income tax under the Income Tax Act 2015 (Act 896) and collects royalties at rates prescribed under Act 919.
The Petroleum Commission, established under the Petroleum Commission Act 2011 (Act 821), is the primary regulatory body for upstream petroleum in Ghana. The Petroleum Commission's mandate includes reviewing and approving Petroleum Concession Agreements, monitoring exploration and development work programmes, enforcing health, safety, and environmental standards, and approving the appointment of key technical personnel. The Environmental Protection Agency (EPA) of Ghana, constituted under the Environmental Protection Agency Act 1994 (Act 490), issues environmental permits and approves environmental impact assessments (EIAs) required before petroleum exploration activities commence.
The Ghana National Petroleum Corporation (GNPC), established under the Ghana National Petroleum Corporation Law 1983 (PNDCL 64) and reconstituted under the Ghana National Petroleum Corporation Act, carries the national interest in upstream petroleum contracts and holds a carried interest in concession areas on behalf of the Republic of Ghana. GNPC participates in concession agreements both as a regulator and as a joint interest holder, representing the Ghanaian state's commercial stake in petroleum development.
A Petroleum Concession Agreement in Ghana must comply with the local content requirements prescribed under the Petroleum (Local Content and Local Participation) Regulations 2013 (LI 2204). These regulations require petroleum companies to give preference to Ghanaian goods, services, and personnel, and to submit annual local content plans to the Petroleum Commission for approval. Non-compliance with LI 2204 constitutes grounds for suspension or revocation of the petroleum licence under Act 919.
The Alternative Dispute Resolution Act 2010 (Act 798) provides the statutory framework for arbitration of petroleum disputes in Ghana, and the Ghana Arbitration Centre (GAC) administers international commercial arbitration proceedings. Many Petroleum Concession Agreements provide for arbitration under the International Chamber of Commerce (ICC) Rules or the United Nations Commission on International Trade Law (UNCITRAL) Rules for major commercial disputes, with the seat of arbitration in Accra or a neutral jurisdiction such as London or Paris.
When Do You Need a Petroleum Concession Agreement (Ghana)?
A Petroleum Concession Agreement in Ghana is required whenever a company seeks to explore for, develop, or produce petroleum resources within a contract area designated by the Petroleum Commission under the Petroleum (Exploration and Production) Act 2016 (Act 919).
A Petroleum Concession Agreement is needed when an international oil company (IOC) or indigenous Ghanaian petroleum company applies to the Petroleum Commission for an exploration licence covering an offshore or onshore block in Ghana, including deepwater blocks in the Gulf of Guinea. The agreement must be executed before any seismic surveys, exploratory drilling, or other petroleum activities commence within the contract area.
A Petroleum Concession Agreement is required when an existing licensee seeks to extend its exploration period or convert its exploration licence into a development and production licence following a commercial discovery, in accordance with the work programme obligations and timelines prescribed under Act 919.
A Petroleum Concession Agreement is needed when GNPC, acting on behalf of the Republic of Ghana, and a private petroleum contractor agree to define the terms of state participation in a petroleum block, including the carried interest percentage, the conditions for GNPC's additional participating interest, and the funding obligations of each party during the exploration, development, and production phases.
A Petroleum Concession Agreement is needed when a petroleum contractor proposes to assign, transfer, or mortgage its interests in a contract area to a third party, since Act 919 requires prior written approval of the Petroleum Commission before any assignment of petroleum rights in Ghana.
A Petroleum Concession Agreement is required when the parties to an existing petroleum arrangement wish to amend the material terms of their relationship — including changes to the work programme, cost recovery provisions, royalty rates, or relinquishment obligations — to reflect changes in geological data, commodity prices, or regulatory requirements issued by the Petroleum Commission or the Ghana Revenue Authority (GRA).
Companies operating in Ghana's petroleum sector should prepare a Petroleum Concession Agreement with the assistance of Ghanaian petroleum lawyers enrolled with the Ghana Bar Association, in consultation with technical advisers experienced in West African upstream operations. The agreement must be reviewed against the current regulations issued by the Petroleum Commission, the EPA, and the Minerals Commission where the contract area overlaps with mineral concession areas.
What to Include in Your Petroleum Concession Agreement (Ghana)
A binding Petroleum Concession Agreement in Ghana under the Petroleum (Exploration and Production) Act 2016 (Act 919) must contain the following essential elements.
Parties and Capacity: Full legal names, registration numbers, and registered addresses of the contractor (which may be a consortium of companies), GNPC as the state entity, and any other parties. Foreign companies must be registered with the Registrar General's Department (RGD) under the Companies Act 2019 (Act 992) before executing a Petroleum Concession Agreement in Ghana.
Contract Area Description: A precise geographic description of the contract area, including the coordinates of the block boundaries, the total area in square kilometres, and whether the area is onshore, shallow water (continental shelf), deepwater (beyond 200 metres), or ultra-deepwater. Maps and coordinates are attached as schedules to the agreement.
Exploration Period and Work Programme: The duration of the initial exploration period (typically three years for the first sub-period, extendable by two further sub-periods), the minimum work obligations for each sub-period (including the number of exploration wells to be drilled and the minimum expenditure commitment), and the relinquishment obligations upon entry into each subsequent sub-period, as required by Act 919.
Development and Production Period: The term of the development and production phase following a commercial discovery (typically twenty-five to thirty years from the date of first production), the conditions for conversion from exploration to development, and the obligations to submit a Field Development Plan (FDP) for approval by the Petroleum Commission within a prescribed timeframe after a commercial discovery declaration.
Royalties and Petroleum Income Tax: The royalty rates payable to the Republic of Ghana, which vary by production volume and location (onshore, shallow offshore, deepwater) as prescribed under Act 919 and the relevant applicable regulations. Petroleum income tax is payable at the rate prescribed under the Income Tax Act 2015 (Act 896), administered by the Ghana Revenue Authority (GRA).
Local Content Obligations: The contractor's obligations to comply with the Petroleum (Local Content and Local Participation) Regulations 2013 (LI 2204), including preference for Ghanaian goods and services, employment and training of Ghanaian nationals, and submission of annual local content plans to the Petroleum Commission.
Environmental and Safety Obligations: The contractor's obligation to obtain an environmental permit from the Environmental Protection Agency (EPA) under the Environmental Protection Agency Act 1994 (Act 490) and to comply with the Petroleum Commission's health, safety, and environmental guidelines and international standards such as OSPAR, MARPOL, and ISO standards applicable to offshore petroleum operations.
GNPC Participation: The carried interest held by GNPC during the exploration phase, GNPC's right to acquire an additional participating interest upon a commercial discovery, and the terms on which GNPC's interest costs are recovered from production revenues.
Dispute Resolution: The mechanism for resolving disputes arising under the agreement, which may include expert determination for technical disputes, international arbitration under ICC or UNCITRAL Rules for commercial disputes, and reference to Ghanaian courts under Act 919 for regulatory matters. The seat of arbitration and governing law should be expressly specified.
Forms-legal.com provides this Petroleum Concession Agreement template as a starting point for petroleum companies and their advisers operating in Ghana. Given the technical complexity and the significant financial value of petroleum concession arrangements, parties should seek advice from Ghanaian petroleum lawyers and international oil and gas counsel before execution.
Assignment and Change of Control: Restrictions on assignment of the contractor's interest in the contract area without prior written approval of the Petroleum Commission, anti-assignment provisions applicable to indirect transfers through changes in corporate ownership, and the conditions under which consent may be withheld or conditioned under Act 919.
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A Petroleum Concession Agreement in Ghana is governed primarily by the Petroleum (Exploration and Production) Act 2016 (Act 919), which vests ownership of petroleum in the ground in the Republic of Ghana and establishes the legal framework for granting exploration and production rights. The Petroleum Commission Act 2011 (Act 821) governs the regulatory oversight exercised by the Petroleum Commission over upstream petroleum operations. The Income Tax Act 2015 (Act 896), administered by the Ghana Revenue Authority (GRA), determines the petroleum income tax and royalty obligations of petroleum contractors. The Petroleum (Local Content and Local Participation) Regulations 2013 (LI 2204) impose mandatory local content obligations on all petroleum contractors in Ghana. Foreign companies executing a Petroleum Concession Agreement must also comply with the Companies Act 2019 (Act 992) regarding their registration and legal capacity to contract in Ghana. The Alternative Dispute Resolution Act 2010 (Act 798) provides the framework for arbitration of petroleum disputes, and the Environmental Protection Agency Act 1994 (Act 490) governs environmental permitting obligations that apply before petroleum activities commence.
The Petroleum Commission, established under the Petroleum Commission Act 2011 (Act 821), is the primary upstream petroleum sector regulator in Ghana with responsibility for licensing, monitoring, and enforcing compliance in the upstream petroleum industry. In the context of a Petroleum Concession Agreement, the Petroleum Commission reviews and approves the terms of the agreement before it takes effect, monitors the contractor's compliance with the agreed work programme and minimum expenditure commitments, approves amendments to the agreement including changes to the exploration work programme or field development plan, and approves any assignment or transfer of the contractor's interests in the contract area. The Petroleum Commission also enforces health, safety, and environmental standards applicable to petroleum operations in Ghana and has the power to suspend or revoke a petroleum licence for non-compliance with Act 919, Act 821, or LI 2204. The Ghana National Petroleum Corporation (GNPC) represents the commercial interest of the Ghanaian state in concession agreements and participates as a joint interest holder alongside the private contractor.
Local content requirements applicable to a Petroleum Concession Agreement in Ghana are prescribed under the Petroleum (Local Content and Local Participation) Regulations 2013 (LI 2204), which impose obligations on petroleum contractors to give preference to Ghanaian goods, services, and personnel throughout the exploration, development, and production phases. Under LI 2204, petroleum contractors must submit an annual local content plan to the Petroleum Commission setting out the steps they will take to maximise Ghanaian participation in petroleum operations, including procurement from Ghanaian suppliers, employment of Ghanaian nationals in technical, managerial, and other roles, and training and capacity-building programmes for Ghanaian employees. LI 2204 prescribes minimum percentages of Ghanaian equity participation in certain categories of petroleum services. The Petroleum Commission monitors compliance with local content obligations and may direct a contractor to submit a remedial local content plan where actual performance falls short of the agreed targets. Non-compliance with LI 2204 constitutes grounds for suspension or revocation of the petroleum licence under Act 919.
Disputes arising under a Petroleum Concession Agreement in Ghana are typically resolved through a tiered dispute resolution mechanism. Technical disputes relating to geological data, reservoir management, or production accounting are commonly referred to expert determination by an independent technical expert appointed by agreement between the parties or, failing agreement, by the President of the relevant professional institution. Commercial disputes between the contractor and GNPC or the Government of Ghana are typically referred to international arbitration under the Rules of the International Chamber of Commerce (ICC) or the United Nations Commission on International Trade Law (UNCITRAL) Rules, with the seat of arbitration in Accra, London, or Paris. The Alternative Dispute Resolution Act 2010 (Act 798) provides the domestic statutory framework for arbitration, and the Ghana Arbitration Centre (GAC) is available to administer proceedings. Regulatory disputes between the contractor and the Petroleum Commission may be referred to the High Court (Commercial Division) in Accra under Act 919. The governing law of the Petroleum Concession Agreement is the law of Ghana.
Assignment of a petroleum concession interest in Ghana requires the prior written approval of the Petroleum Commission under the Petroleum (Exploration and Production) Act 2016 (Act 919). Act 919 prohibits direct assignment of a contractor's interest in a contract area without the Petroleum Commission's consent. The Petroleum Commission evaluates proposed assignments by reference to the technical and financial capability of the proposed assignee, the impact of the assignment on the work programme and minimum expenditure obligations under the agreement, and any national interest considerations including the participation of GNPC. Indirect transfers arising from a change of control of the company holding the petroleum licence — for example through a corporate acquisition, merger, or share sale — are also subject to Petroleum Commission approval under Act 919. The assignee must meet all regulatory requirements applicable to petroleum contractors in Ghana, including registration under the Companies Act 2019 (Act 992) and compliance with the Petroleum (Local Content and Local Participation) Regulations 2013 (LI 2204).
Environmental obligations under a Petroleum Concession Agreement in Ghana are governed by the Environmental Protection Agency Act 1994 (Act 490) and the regulations and guidelines issued by the Environmental Protection Agency (EPA) of Ghana. Before commencing petroleum exploration activities within the contract area, the contractor must obtain an environmental permit from the EPA and submit an Environmental Impact Assessment (EIA) describing the potential environmental effects of the proposed operations and the mitigation measures to be implemented. The Petroleum Commission's health, safety, and environmental guidelines apply to all offshore and onshore petroleum operations, and international standards including MARPOL 73/78 (prevention of pollution from ships) and applicable ISO environmental management standards are typically incorporated by reference into the Petroleum Concession Agreement. The contractor bears full liability for any environmental damage caused by petroleum operations within the contract area and is required to provide financial security — such as a bank guarantee or environmental bond — to cover the cost of any required remediation. Upon cessation of operations, the contractor must decommission all petroleum facilities and restore the contract area in accordance with an approved decommissioning plan.
Petroleum companies operating under a Petroleum Concession Agreement in Ghana are subject to several categories of fiscal obligation administered by the Ghana Revenue Authority (GRA). Royalties are payable at rates prescribed under the Petroleum (Exploration and Production) Act 2016 (Act 919), which vary based on production volume and the location of the contract area (onshore, shallow offshore at less than 100 metres water depth, or deepwater at more than 100 metres water depth). Petroleum income tax is levied under the Income Tax Act 2015 (Act 896) at the applicable corporate rate for petroleum operations. Additional oil entitlement (AOE), also known as the government's share of additional profit petroleum, is triggered when the contractor's after-tax return exceeds specified thresholds and is designed to capture windfall profits during periods of high commodity prices. Surface rentals are payable annually to the Petroleum Commission in respect of the contract area. Value Added Tax (VAT) at the rate prescribed under the Value Added Tax Act 2013 (Act 870) applies to certain goods and services procured by petroleum contractors in Ghana, subject to any applicable exemptions.
This template is provided for informational purposes only and does not constitute legal advice. Laws vary by jurisdiction and change over time. Consult a qualified attorney for advice specific to your situation.Full disclaimer
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