AN OVERVIEW OF DIFFERENT REGULATORY MODELS ON UPSTREAM OIL AND GAS RESOURCES

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Corruption and Political Patronage

While Stevens correctly indicates that large revenues accruing from natural resources should generate wealth for an economy, promote economic progress and reduce poverty, this has not normally been the case in Angola.553 Like many newly independent countries in Africa, Angola suffered from significant social and political instability. But despite its difficult post-independence history, Angola maintained the ranking of second largest oil producer in Africa and was thus able to generate billions of dollars in petroleum revenue. Discussing the post-September 2008 election political economy in Angola, which projects rapid increment in oil revenue, Govender and Skagestad comment that ‘…if Angola is “in peace” it is not yet “fully at peace”, given the fact that the majority of Angola’s population still do not have an equitable share in the growing [oil] prosperity’.555 Massive sums of oil revenue have been spent on financing armed conflict,556 but were also misused or misappropriated by a corrupt government system.

Poverty, Deprivation and Conflict

1n 2003 the IMF reported that Angola’s oil boom sharply contrasts wide spread poverty.582 In 2012, the IMF reported that although ‘during the oil price boom of 2003–08 Angola began to rebuild its infrastructure, the oil and non-oil sectors grew substantially, and per capita GDP reached middle-income levels’, ‘income inequality remains high, and poverty in rural areas is widespread’.583 As Gasper indicate, Angola [was] facing secessionist bid and political clashes in Cabinda, an oil-rich region in the northern part of the country. One of the major reasons for this conflict is the feeling by the Cabindan people that they are not getting enough from their natural endowments. It should be borne in mind that Cabinda alone accounts for two-thirds of the Angola’s current oil production, contributing more than $5 billion dollars to Angola’s gross export earnings.

The Organisational Structure

The current regulatory framework in Angola established an organisational structure for the oil industry. Within the government, there is a Ministry of Petroleum (MinPet) with the responsibility of overseeing the oil industry.598 The MinPet approves exploration and development activities, regulates field productions levels, and jointly with the Ministry of Finance and the National Bank of Angola (BNA), supervises the operations and investments of Sonangol.599 As an NOC, Sonangol has a central role to play in the oil industry, and performs multiple tasks. Its activities include the exploration and production of oil; the development of oil support services; exportation of oil; and oversight of hydrocarbon and gas policy.600 As indicated earlier, Sonangol in turn holds the exclusive concessions for the exploration, development, production, storage, transportation, distribution and marketing of oil products in Angola.

Contractual Arrangements

Any company wishing to conduct petroleum activities in Angola is obliged to enter into some association with Sonangol, the national concessionaire.656 The contractual associations may take the form of a normal business corporation or consortium, a PSA, or a risk service contract.657 The contractual associations take the form of JOAs.658 These allow Sonangol to do business with IOCs and participate as a partner in the management of oil operations. Although the government approves such contracts on a case by case basis, Sonangol is authorised to serve as an associate or equity partner in order to maximise profit. Sonangol and its partners share in the petroleum produced, according to a percentage interest.659 For instance, a company with 10 per cent stake in a JV will have to pay 10 per cent of the costs associated with it. The IOCs will then pay a series of taxes and royalties on their equity shares to the government,660 and the profit that remains is then divided up amongst the participants in the license. Under the JVs, Sonangol has to provide its share in the funding upfront, and this has produced complex financing structures.

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TABLE OF CONTENTS :

  • CHAPTER INTRODUCTION
    • 1.1 The Importance of Petroleum as a Source of Energy
    • 1.2 Africa’s Petroleum Resources Endowment
    • 1.3 The Research Problem
    • 1.4 Research Questions
    • 1.5 The Aim of the Study
    • 1.6 Underlying Assumptions
    • 1.7 Significance
    • 1.8 Research Methodology
    • 1.8.1 Design
    • 1.8.2 Research Methods
    • 1.9 Structural Framework
  • CHAPTER AN OVERVIEW OF DIFFERENT REGULATORY MODELS ON UPSTREAM OIL AND GAS RESOURCES
    • 2.1 Introduction
    • 2.2 The Ownership of Oil and Gas Resources in situ
      • 2.2.1 Ownership under the Common Law
      • 2.2.1.1 The General Rule under the Common Law: Cuius est Solum eius est Usque ad Coelum et ad Inferos
      • 2.2.1.2 The Statutory Exception to the Common Law: the General Practice of Exclusive State Ownership
      • 2.2.1.3 Exception to the General Rule under the Common Law: State and Private Ownership
      • 2.2.1.3.1 The USA
      • 2.2.1.3.2 Canada
      • 2.2.2 Ownership under Civil Law
  • CHAPTER OIL AND GAS LAW IN ANGOLA: THE NORWEGIAN ‘CARRIED-INTEREST’ MODEL
    • 3.1. Introduction
    • 3.2. The Norwegian Petroleum Regulatory System
      • 3.2.1. The Norwegian General Petroleum Legal Framework
      • 3.2.2. The Norwegian ‘Carried-Interest’ Model
      • 3.2.3. Relations between Angola and Norway in the Oil Sector
    • 3.3. Angola: the Petro-State
      • 3.3.1. Angola’s Strategic Geographical Location
      • 3.3.2. Angolan Oil and Gas Exploration History
      • 3.3.3. Angola’s Current Petroleum Resources Wealth
      • 3.3.4. Future Prospects and Advantages
      • 3.3.5 Challenges
      • 3.3.5.1 The Dutch Disease
      • 3.3.5.2 The Resource Curse or ‘the Resource Management Impact’
      • 3.3.5.3 Corruption and Political Patronage
      • 3.3.5.4 Poverty, Deprivation and Conflict
      • 3.3.6 The Regulatory Framework in Historical Context
      • 3.3.7 The Current Regulatory Framework
      • 3.3.7.1 The Organisational Structure
      • 3.3.7.2 The Legislative Framework
      • 3.3.7.3 Contractual Arrangements
    • 3.4 An Evaluation of the Key Features of the Norwegian Carried-Interest Model in Angolan Petroleum Law
  • CHAPTER OIL AND GAS LAW IN NIGERIA: THE BRITISH DISCRETIONARY ALLOCATION MODEL
    • 4.1. Introduction
    • 4.2. The British Petroleum Regulatory Framework
      • 4.2.1. The Regulatory Framework
      • 4.2.1.1. The Petroleum (Production) Act 1934 and the Continental Shelf Act
      • 4.2.1.2. The Current British Petroleum Regime
      • 4.2.1.3. The Discretionary Licensing System in the UK
      • 4.2.2. The British Petroleum Fiscal Regime
      • 4.2.3. The Legal Nature of the License in the UK
      • 4.2.4. State Participation in the UK
    • 4.3. The Nigerian Legal Framework: The British Model
      • 4.3.1. Nigeria’s Petroleum Exploration and Legal Framework: Historical Context
      • 4.3.1.1. Nigeria’s Legal Framework in Historical Context
      • 4.3.1.2. Nigeria’s Current Petroleum Endowment and Legislative Framework
      • 4.3.2. The Current Legal Framework
      • 4.3.3. Types of Licences in Nigeria
      • 4.3.4. Non-decentralised Title over Oil and Gas Resources or Federal Control
      • 4.3.5. Contractual Arrangements
      • 4.3.5.1. The JV Arrangement
      • 4.3.5.2. The PSCs/PSAs
      • 4.3.5.3. Service Contracts
      • 4.3.5.4. The Modern Concession
      • 4.3.6. State Participation in Nigeria
      • 4.3.7. Nigeria’s Fiscal Regime
      • 4.3.8. Legal Reforms
      • 4.3.8.1. The Nigerian Local Content/ Localisation
      • 4.3.8.2. The PIB
      • 4.3.9. The New Institutions created under the PIB
    • 4.4. Critical Appraisal of the PIB and its New Institutions
  • CHAPTER THE SOUTH AFRICAN OIL AND GAS LAW: A UNIQUE MODEL
    • 5.1. Introduction
    • 5.2. Oil and Gas Exploration to Meet South Africa’s Energy Demands
      • 5.2.1. Brief Historical Account of Oil and Gas Exploration and Development in South Africa
      • 5.2.2. The Current Exploration Climate
    • 5.3. South Africa’s Oil and Gas Exploration and Development Policy Framework
    • 5.4. The Legislative Framework
  • CHAPTER COMPARATIVE ANALYSIS OF THE ANGOLAN, THE NIGERIAN, AND THE SOUTH AFRICAN MODELS

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PROTECTION OF PETROLEUM RESOURCES IN AFRICA: A COMPARATIVE ANALYSIS OF OIL AND GAS LAWS OF SELECTED AFRICAN STATES

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