ACT No. XXVIII of 2023 AN ACT to amend the Petroleum (Production) Act, Cap. 156, to provide for the ownership of petroleum and to make provision with respect to prospection, exploration and production of petroleum and for purposes connected with the matters aforesaid.

I assent.

(L.S.)

GEORGE VELLA

President

18th July, 2023

ACT No. XXVIII of 2023

AN ACT to amend the Petroleum (Production) Act, Cap. 156, to

provide for the ownership of petroleum and to make provision with

respect to prospection, exploration and production of petroleum and

for purposes connected with the matters aforesaid.

BE IT ENACTED by the President, by and with the advice and

consent of the House of Representatives, in this present Parliament

assembled, and by the authority of the same as follows: -

(1) The short title of this Act is the Petroleum (Production) Short title and

(Amendment) Act, 2023 and it shall be read and construed as one with commencement.

the Petroleum (Production) Act, hereinafter referred to as "the Cap. 156.

principal Act".

(2) This Act shall come into force on such date as the Minister

may, by notice in the Gazette, establish and different dates may be so

established for different provisions and purposes of this Act.

Article 2 of the principal Act shall be substituted by the

Substitution of

article 2 of the

following new article

principal Act.

2. In this Act unless the context otherwise

"Interpretation.

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

S. L. 535.02.

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;

"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;

"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.".

Article 3 of the principal Act shall be amended as follows

Amendment of

article 3 of the

principal Act.

(a) sub-article (1) thereof shall be substituted by the

following new sub-article

(1)

The ownership of any petroleum existing in

Malta is hereby vested in the Government of Malta. The

Government of Malta has sovereign rights, jurisdiction

and exclusivity for the purposes of prospecting for,

exploring for and producing petroleum in Malta. The

right for prospection, exploration and, or production of

such petroleum shall be subject to a licence granted

under the provisions of this Act.";

(b) in sub-article (2) thereof, for the word "person" there

shall be substituted the word "entity", for the words "searches or

drills or bores for or extracts petroleum on, under or from Malta"

there shall be substituted the words "prospects for and, or

explores for and, or produces petroleum from Malta" and in the

second proviso thereof for the word "person" there shall be

substituted the word "entity"; and

(c) in the proviso to sub-article (3) thereof, for the word

"person" there shall be substituted the word "entity".

Immediately after article 3 of the principal Act there shall be

added the following new article

3A. (1) 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.

(2) Whenever an area is made available for the

exercise of the activities set out in sub-article (1), the

Minister shall ensure that there is no discrimination

between entities as regards access to and the exercise of

these activities.

(3) The Minister may, on grounds of national

security, refuse to allow access to and the exercise of

the activities referred to in sub-article (1), to any entity

which is effectively controlled by third countries or

third country nationals.".

Article 4 of the principal Act shall be substituted by the

following new article

4. (1) The Minister shall have the power to

grant to the successful applicant, a licence to prospect

produce petroleum.

for, explore for and produce petroleum in Malta.

(2) Any such licence shall be granted for such

consideration (by way of fee, royalty, revenue, profit

from the sale o r disposal of petroleum and, or

otherwise) as the Minister may determine, and over

such areas, for such periods and upon such other terms

and conditions as may be stipulated in the call for

applications and the licence to ensure the proper

performance of the licensed activities

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.

(3) The duration of validity of a licence shall not

exceed the period necessary to complete the activities

specified in the licence

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.".

Sub-article (1) of article 5 of the principal Act shall be Amendment of

article 5 of the

substituted by the following new sub-article

principal Act.

5. (1) Subject to the provisions of this Act and

to any international obligation entered into by

Government, the Minister may make regulations

generally for

(a) licensing

and

regulating

the

prospection, exploration and production of

petroleum in Malta, including the conservation of

the petroleum resources;

(b) establishing an Advisory Committee,

made up of persons qualified in the relevant

subject, to provide advice and make

recommendations to the Minister for any matter

concerning the granting of a licence, the regulation

and monitoring of the contractual obligations and

any other matter in relation to this Act;

(c) reducing as far as possible the

occurrence of major accidents relating to offshore

oil and gas operations and to limit their

consequences

during

such

prospection,

exploration and production activities;

(d) providing for the possibility for the

issue of authorisations to public officers or other

entities to ensure the application of this Act and to

carry out inspections, enforcement actions and

any other ancillary action that may be necessary

in order to properly implement the provisions of

this Act; and

(e) carrying out any of the provisions of

this Act

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 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.".

Immediately after article 5 of the principal Act there shall be Addition of new

articles to the

added the following new articles

principal Act.

5A. (1) The Government of Malta or any entity

"State participation

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.

(2) The Government of Malta’s participation in the

activities of prospecting for, exploring for and

producing petroleum may be managed by the

Government itself or by a legal person that the Minister

may prescribe by order published in the Gazette.

(3) The rules for payment of considerations

referred to in sub-article (2) of article 4, as well as any

requirement for Government’s participation, shall be

fixed by the Minister in such a way as to ensure that the

independence of management of entities is maintained.

(4) Where the grant of a licence is subject to

Government’s participation in the activities and where a

legal person has been entrusted solely with the

management of this participation, or where the

Government itself manages the participation, neither

the legal person nor the Government shall be prevented

from assuming the rights and obligations associated

with such participation

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 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.

(5) Notwithstanding the provisions of sub-article

(4), the legal person or the Government may oppose a

decision by the holders of a licence which would not

respect the conditions and requirements specified in the

licence, regarding depletion policy and protection of the

financial interests of Malta

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.

(6) Where the Government’s participation in the

activities is managed by a legal person, which also

holds the licences, then

(a) the legal person shall keep separate

accounts for its commercial role and its role as

manager of the Government’s participation; and

(b) the legal person shall ensure that there

is no flow of information from the part of the

legal person responsible for the management of

the Government’s participation to the part of the

legal person which holds a licence.

(7) Where the part of the legal person responsible

for the management of the Government’s participation

engages the part of the legal person which holds a

licence as a consultant, the former may make available

any information which is necessary for the consultancy

work to be carried out. The holders of all licences to

which the information relates shall be informed in

advance of what information will be given in this way,

so that they have sufficient time to raise objections,

which shall be submitted to the Minister and the

Minister shall decide on the matter after having heard

the views of the two parties.

(8) The Minister shall ensure that the monitoring

of the entities granted a licence is limited to that

necessary to ensure compliance with the conditions,

requirements and obligations referred to in sub-article

(2) of article 4 and in particular shall ensure that no

holder of a licence is required to provide information on

its intended or actual sources of procurement except at

the request of the Minister in order to ensure

compliance with national and international legislation.

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.

5C. (1) No holder of a licence may transfer a

licence or assign rights arising from a licence to another

rights arising from

entity, except upon written consent of the Minister,

which may be granted if

(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.

(2) Any holder of a licence who transfers a licence

or assigns the rights arising from a licence without the

written consent of the Minister shall be guilty of an

offence and shall be liable, on conviction to a fine

(multa) of not less than ten thousand euro (€10,000) and

not exceeding two million euro (€2,000,000) or

imprisonment which shall not exceed a term of five

years, or to both such fine and imprisonment.".

Article 6 of the principal Act shall be amended as follows

Amendment of

article 6 of the

principal Act.

(a) in sub-article (1) thereof, for the word "person" there

shall be substituted the word "entity", for the words "President of

Malta for permission" there shall be substituted the words

"Lands Authority for permission", for the words "President of

Malta the examination" there shall be substituted the words

"Chairperson of the Board of Governors of the Land Authority

the examination", for the words "President of Malta may

declare" there shall be substituted the words "Chairperson of the

Board of Governors of the Lands Authority may declare", for the

words "Accountant General" there shall be substituted the words

"Lands Authority" and for the words "under section 8(1) of the

Land Acquisition (Public Purposes) Ordinance or any other law

amending or substituted for that subsection," there shall be

substituted the words "under sub-article (1) of article 37 of the

Government Lands Act or any other law amending or

substituting the said sub-article,";

(b) in sub-article (2) thereof, for the words "President of

Malta" there shall be substituted the words "Chairperson of the

Board of Governors of the Lands Authority", for the words

"Land Acquisition (Public Purposes) Ordinance" there shall be

substituted the words "Government Lands Act", for the words

"substituted for that Ordinance," there shall be substituted the

words "substituting that Act,", for the words "Accountant

General" there shall be substituted the words "Lands Authority"

and for the words "of that Ordinance" there shall be substituted

the words "of that Act";

(c) in sub-article (3) thereof, whenever the word

"section" occurs, there shall be substituted the word "article",

whenever the words "Accountant General" occurs there shall be

substituted the words "Lands Authority" and paragraph (e)

thereof shall be substituted by the following new paragraph

"(e) in any case where anything has been

done or may be done under the provisions of sub-

article (1) of article 37 of the Government Lands

Act or under any provision of law amending or

substituting that sub-article, by or on behalf of the

Lands Authority, the payment to the Lands

Authority of all damages, to be assessed in

accordance with the provisions of sub-article (2)

of article 37 of the Government Lands Act."; and

(d)

sub-article (4) thereof shall be substituted by the

following new sub-article

"(4) Words and phrases used in this article shall,

unless the context otherwise requires, have the same

meaning as in the Government Lands Act or in any law

amending or substituting the said Act.".

Immediately after article 6 of the principal Act there shall be Addition of new

articles to the

added the following new articles

principal Act.

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.

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.

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

Act No. XXVIII of was in force prior to the Petroleum (Production)

2023. (Amendment) Act, 2023.".

Passed by the House of Representatives at Sitting No. 148 of the

12th July, 2023.

ANĠLU FARRUGIA

Speaker

RAYMOND SCICLUNA

Clerk of the House of Representatives

€1.26