ADVISOR - AIPN

EDUCATION
Moving towards an African Lex Petrolea
A recent initiative from the African Petroleum Producers
Association (APPA) to carry out a comparative analysis of the
hydrocarbons legislation, regulations and model agreements in the
APPA Member States is a unique initiative that has never been
completed on such a large scale before. Importantly, the initiative
will make a significant contribution to the development of Lex
Petrolea in Africa.
The African Petroleum Producers Association
The APPA is an African organisation similar to the Organisation of
the Petroleum Exporting Countries (OPEC), although on a smaller
scale since Africa only encompasses 8 per cent of worldwide oil
and natural gas reserves, and 12 per cent and 8 per cent of
worldwide daily production of oil and natural gas respectively.
The APPA was initially created by Algeria, Angola, Benin,
Cameroon, Gabon, Libya and Nigeria in Lagos, Nigeria in 1987. The
APPA is currently comprised of 18 Member States 1 with the recent
addition of Ghana and Niger. Member States are mainly located in
North, West and Central Africa. No frontier East African country is
a member yet.
The APPA is intended to develop as a common platform for oil
and gas policy initiatives and development strategy and is mainly
aimed at enabling Member States to derive equitable revenues
from the management of hydrocarbons resources in Africa. To this
end, the APPA has commissioned a significant number of
referential studies and has created an APPA Petroleum Institute,
an APPA Fund for Technical Cooperation and an APPA Data Bank.
The background of the comparative analysis
The APPA has rightly recognised the growing interest in
hydrocarbons resources in Africa both in mature and frontier areas,
but has also acknowledged the worldwide quest to develop
hydrocarbons resources and the ensuing competition between
countries for investment.
The APPA has therefore understood the importance of a
properly designed petroleum regime to ensure the allocation of
maximum revenues to the Member States and at the same time
to remain attractive for international oil companies investing all
over the world. A properly designed petroleum regime will not
trigger investment, which is mainly based on the attractiveness of
By Nicolas Bonnefoy, Partner, Ashurst LLP London
nicolas.bonnefoy@ashurst.com
the geology, but an ill-designed petroleum regime will certainly
deter international oil companies from investing in spite of an
attractive geology.
The comparative analysis
In this context, the APPA 7th programme of action for 2008-2011
included the performance of a comparative analysis of the
hydrocarbons legislation, regulations and model agreements in
force in the 16 APPA Member States. Based on the terms of
reference, the comparative analysis was intended to allow the
APPA Member States to review and adjust the legislation,
regulations and model agreements applicable to the exploration
for and exploitation of hydrocarbons in their respective countries
in order strengthen their control over hydrocarbons resources,
maximise proceeds derived from the exploitation of hydrocarbons
resources and ensure compliance with environmental legislation.
The engagement also included the determination of a set of
principles, practices and trends applicable to the hydrocarbons
industry in Africa to be incorporated into a model production
sharing agreement.
The engagement was awarded to a consortium of
international law firms 2 and consultants 3 on 23 March 2010 further
to a competitive bidding process, although the engagement
officially started in July 2010. The initial steps included a significant
information gathering process to collect the various pieces of
legislation, regulations and model agreements in force in the 16
APPA Member States. An initial meeting finally took place in
Brazzaville in December 2010. The comparative analysis, the
principles, practices and trends applicable to the hydrocarbons
industry in Africa and the model production sharing agreement
were progressively incorporated into a report and discussed with
the APPA in three phases: a preliminary report was discussed
during a technical meeting in Brazzaville in June 2011, an updated
report was presented in Malabo in February 2012 and the final
report was completed both in French and English in July 2012.
As mentioned above, this comparative analysis and the
preparation of a model production sharing agreement is truly a
unique initiative that has never before been undertaken and
successfully completed on such a large scale. Even the Association
of International Petroleum Negotiators, which had been the first
organisation to undertake a similar initiative, could not agree on a
model production sharing agreement.
1 Algeria, Angola, Benin, Cameroon, Chad, Democratic Republic of Congo, Congo, Côte d’Ivoire, Egypt, Gabon, Ghana, Equatorial Guinea, South Africa, Libya, Mauritania, Niger,
Nigeria and Sudan.
2 Gide Loyrette Nouel (where I was working at the time of this engagement) and Macleod Dixon (now Norton Rose).
3 Van Meurs Corporation and the Centre for Energy Petroleum and Mineral Law & Policy (Dundee University).
SEPTEMBER 2012 • 24