Support Activities in the Oil and Gas Sector

The Minister of Energy and Mineral Resources has deemed that there is a need to regulate support activities in the oil and gas sector in order that these activities are independent, reliable, transparent, competitive, efficient, and drive development potential. The Regulation covers both upstream and downstream business activities.

The service support businesses include, among others:

-                 exploration;

-                 exploitation and production;

-                 processing;

-                 distribution;

-                 storage; and

-                 commercialization.

The industrial support includes the provision of goods and materials, as well as equipment.

The Regulation also sets out the support activities that are covered in both construction and non-construction services. For example, in construction services the support business would include design engineering and engineering procurement and construction (EPC). In contrast, non-construction services would include support services such as seismic surveys, drilling, decommissioning, education and training, and research and development, among others.

Generally, all support service providers must possess a Registration Statement Letter. There are exceptions to this obligation for certain businesses within the oil and gas sector. To obtain the necessary Registration Statement Letter the support services provider must submit an application to the Director General. The applicant is then required to furnish company information that evidences that they have the capabilities to provide the services that they claim. The Director General will then issue a decision on the application within 10 days. If the application is refused then the Director General is required to provide written reasons for the refusal.

The Regulation provides for professional and business associations to be formed and deals with the procedures for garnering recognition for any associations formed.

Any breach of the provisions of the Regulation will be dealt with through the imposition of administrative sanctions. These sanctions include written warnings and the cancellation of permits / licenses.

The Regulation has been in force since 22 August 2008.