Petroleum Act

Section 1. Short title Section This Act may be cited as the Petroleum Act.

Section 2. Interpretation Section any natural gas dissolved in crude oil under reservoir conditions; and

Section 3. Scope of the Act Section This Act shall apply to all upstream, midstream and downstream petroleum operations being carried out in Kenya.

Section 4. Act to prevail Section 4(1) Where there is a conflict between this Act and any other Act regarding upstream, midstream and downstream petroleum operations, this Act shall prevail. Section 4(2) For the avoidance of doubt, a provision of any Act that provides for a person or body to grant or deny any permission for any work shall not be construed as granting that person or body any power in relation to upstream petroleum operations.

Section 5. National petroleum policy Section 5(1) The Cabinet Secretary shall develop and publish a national policy on petroleum operations which shall be reviewed at least once in every five years. Section 5(2) The Cabinet Secretary shall ensure that relevant stakeholders participate effectively in the making of the national policy on petroleum operations. Section 5(3) Within three months after the end of each financial year, the Cabinet Secretary shall prepare and publish on its website and in at least two newspapers of national circulation a report on the implementation of the national petroleum policy.

Section 6. National petroleum strategic plan Section 6(1) The Cabinet Secretary shall develop, publish and review a national petroleum strategic plan. Section 6(2) The petroleum strategic plan shall take into account the national petroleum policy and serve as a guide for the implementation of the national policy on petroleum operations. Section 6(3) The Cabinet Secretary shall prescribe Regulations in relation to the content and timelines for the preparation of the petroleum strategic plan.

Section 7. Monitoring implementation of national petroleum strategic plan Section Within three months after the end of each financial year, the Cabinet Secretary shall prepare and publish a report on the implementation of the national petroleum strategic plan.

Section 8. Conduct of petroleum operations Section 8(1) No person shall engage in any petroleum operations in Kenya without having previously obtained the approval of the Cabinet Secretary or Authority in such manner, in such form and on such terms as are prescribed by this Act. Section 8(2) Any upstream petroleum operations shall be conducted in accordance with the provisions of this Act and the terms and conditions of a petroleum agreement. Section 8(3)(a) on its own through the national oil company; Section 8(3)(b) through contractors in accordance with petroleum agreements; or Section 8(3)(c) as may be prescribed by this Act or any other written law. Section 8(4) Subject to this Act, and in accordance with the terms and conditions of a petroleum agreement, the national government may authorize a contractor to engage in upstream petroleum operations within a specified area. Section 8(5) Notwithstanding the provisions of this section, the national government may grant to any person, other than the contractor, a permit for the prospecting and mining of minerals or other natural resources other than petroleum or the conduct of operations other than upstream petroleum operations wit...

Section 9. Promotion of petroleum investments Section 9(1) The national government shall create a conducive environment for investments in petroleum operations and infrastructure development, including formulation of guidelines in collaboration with relevant national government agencies on development of petroleum investments and to disseminate them among potential investors. Section 9(2) The national government shall ensure that petroleum operations and infrastructure development are carried out for the benefit of the people of Kenya. Section 9(3) In its effort to promote petroleum operations and investments, the national government shall facilitate access to land for exploration activities in accordance with the Constitution and any other written law.

Section 10. Functions of the Cabinet Secretary Section 10(1)(a) shall review an application made under this Act for a license or permit before entering into negotiations with an applicant in relation to a petroleum agreement and, where necessary and on the recommendation of the Advisory Committee, reject an application made under this Act in the national interest; Section 10(1)(b) shall upon the recommendation of the Advisory Committee, negotiate, enter into or revoke a petroleum agreement or appoint an authorized representative to enter into or revoke a petroleum agreement in accordance with this Act and a petroleum agreement; Section 10(1)(c) shall generally oversee upstream petroleum operations carried out under the terms and conditions of a petroleum agreement; Section 10(1)(d) shall develop, publish and review national policies and strategic plans in relation to upstream petroleum operations; Section 10(1)(e) shall, upon the recommendation of the Authority approve any proposed exploration activity by a contractor in accordance with the contractor's annual work programme, appraisal programme and production forecasts submitted; Section 10(1)(f) shall, upon the recommendation of...

Section 11. Directions by the Cabinet Secretary Section 11(1) Where a contractor has failed to perform an act or do anything as may be provided for in a petroleum agreement, the Cabinet Secretary may, by notice in writing to a contractor, direct the contractor, consistent with best petroleum industry practices, as to any matter with respect to which regulations may be made under section 127. Section 11(2) Where a contractor fails or neglects to comply with the direction of the Cabinet Secretary in accordance with this section, the Cabinet Secretary may cause to be done all or any of the things required by the direction to be done, and the costs and expenses incurred in doing those things shall be a civil debt due to the National Government from the contractor.

Section 12. Establishment of the National Upstream Petroleum Advisory Committee Section 12(1) There is established a committee to be known as the National Upstream Petroleum Advisory Committee. Section 12(2)(a) the Principal Secretary or an authorized representative in the Ministry responsible for petroleum, who shall be the Chairperson; Section 12(2)(b) the person in charge of petroleum at the ministry responsible for petroleum or an authorized representative; Section 12(2)(c) the Chief Executive or an authorized representative of the National Oil Corporation; Section 12(2)(d) the Attorney-General or an authorized representative; Section 12(2)(e) the Principal Secretary of the National Treasury or an authorized representative; Section 12(2)(f) the Director-General of the National Environment Management Authority or an authorized representative; Section 12(2)(g) the Commissioner-General of the Kenya Revenue Authority or an authorized representative; Section 12(2)(h) the Director-General of the Upstream Petroleum Regulatory Authority or an authorized representative; and Section 12(2)(i) representative of the Council of Governors. Section 12(3) The Director-General of the Authority s...

Section 13. Function of the Advisory Committee Section 13(1)(a) generally advise the Cabinet Secretary on upstream petroleum operations; Section 13(1)(b) advise the Cabinet Secretary during the negotiation of and entering into of petroleum agreements; Section 13(1)(c) upon the recommendation of the Authority, advise the Cabinet Secretary on the suspension, revocation or termination of a petroleum agreement or the recall of a security given under the terms and conditions of a petroleum agreement; Section 13(1)(d) assist the Cabinet Secretary to develop criteria for the negotiation of petroleum agreements between the Cabinet Secretary and a contractor.; Section 13(1)(e) perform such other functions and duties in accordance with this Act or any other written law. Section 13(2) Where the Cabinet Secretary rejects any advice given under this section, the reasons for the rejection shall be communicated in writing to the Advisory Committee within fourteen days.

Section 14. Property in Petroleum Section 14(1) All petroleum existing in its natural condition in strata lying within Kenya and its continental shelf is vested in the National Government in trust for the people of Kenya. Section 14(2) All upstream petroleum resources in subsection (1) shall be managed in accordance with the provisions of the Constitution, this Act and the regulations made thereunder.

Section 15. Constitution of blocks Section 15(1) For the purposes of this Act, the Cabinet Secretary after consultation with the Advisory Committee may, by notice in the Gazette , divide Kenya and its continental shelf into numbered areas which shall be defined by specific geographical co-ordinates, and each area shall be described as a "block". Section 15(2) The Cabinet may reserve any number of blocks for exploration by the national government.

Section 16. Licensing Section 16(1)(a) executing a petroleum agreement in accordance with this Act; or Section 16(1)(b) obtaining a non-exclusive exploration permit in respect of a block for the purpose of obtaining geological, geophysical and geochemical information granted in accordance with section 23. Section 16(2)(a) apply to the Cabinet Secretary for a petroleum agreement; or Section 16(2)(b) apply to the Authority for a non-exclusive exploration permit in accordance with section 22. Section 16(3) An application under this section shall be accompanied by the requisite information to be specified in the Regulations. Section 16(4) A person who engages in upstream petroleum operations without executing a petroleum agreement with the Cabinet Secretary or obtaining a non-exclusive exploration permit from the Authority commits an offence and upon conviction shall be liable to a fine not exceeding twenty million shillings or to imprisonment for a term not exceeding ten years or to both.

Section 17. Financial and technical obligations of the contractor Section 17(1) Where the national government enters into a petroleum agreement, under this Act, it shall do so fairly, equitably, transparently, competitively and cost effectively: Provided that the national government shall enter into a petroleum agreement only with a contractor who shall have the financial, technical and professional capacity necessary to fulfil the contractor's obligations under the petroleum agreement. Section 17(2) The contractor shall maintain financial, technical and professional capacity throughout the length of the contract. Section 17(3) The contractor shall at all times ensure that any subcontractor or agent of the contractor acting on his behalf possesses the necessary skills and qualifications to meet the obligations of the contractor stipulated in the petroleum agreement or as required under this Act.

Section 18. Negotiation, award and execution of petroleum agreements Section 18(1) Subject to section 23 the Cabinet Secretary shall negotiate, award and execute a petroleum agreement, on behalf of the national government, in the form prescribed in the Schedule to this Act. Section 18(2) A petroleum agreement may be executed between the Cabinet Secretary and a contractor after the conclusion of bidding rounds conducted in accordance with this Act. Section 18(3)(a) where no bids have been received during the bidding round; Section 18(3)(b) where the bids that have been received do not satisfy the minimum criteria for the execution of a petroleum agreement; or Section 18(3)(c) where there is insufficient data in relation to a block. Section 18(4) Where the Cabinet Secretary intends to negotiate directly with a contractor in accordance with this section, the Cabinet Secretary shall publish a notice of thirty days on the website of the Ministry, in the Gazette and in at least two newspapers of national circulation. Section 18(5)(a) set out a statement of the details of the contractor with whom the Cabinet Secretary intends to enter into direct negotiations; Section 18(5)(b) invite any...

Section 19. Express rights and obligations in petroleum agreements Section 19(1)(a) perform certain minimum work and incur certain minimum expenditure during the course of exploration operations; Section 19(1)(b) present to the Cabinet Secretary a field development plan in respect of any commercial field and promptly take all steps that are reasonable to develop that field for production; Section 19(1)(c) present to the Cabinet Secretary a work programme and budget for each year of operation; Section 19(1)(d) keep accurate books of accounts and records of upstream petroleum operations and submit quarterly expenditure reports and annual audited financial statements to the Cabinet Secretary; Section 19(1)(e) conduct upstream petroleum operations in accordance with requisite professional and technical skills; Section 19(1)(f) adopt measures necessary for the conservation of petroleum and other resources as well as protect the environment; Section 19(1)(g) give preference to the use of locally available raw materials, products, equipment, manpower, services and continuously transfer technology and build local capacity; Section 19(1)(h) indemnify the Government against all claims made b...

Section 20. Submission of joint operating agreements Section Where two or more persons have formed a partnership with a view of jointly applying for a petroleum agreement, they shall, upon executing a petroleum agreement submit a joint operating agreement to the Cabinet Secretary on or before the effective date of the petroleum agreement.

Section 21. Operator Section 21(1) The contractor shall appoint an operator in relation to the petroleum agreement. Section 21(2) A contractor may substitute one operator for another operator as may be provided for in the petroleum agreement and in this Act. Section 21(3) The public shall be informed of the changes of an operator by way of a Gazette notice, a newspaper of nationwide circulation and a radio of local coverage in the area in which the operations are being undertaken.

Section 22. Application for non-exclusive exploration permit Section 22(1) A person who intends to carry out a non-exclusive exploration survey shall apply to the Authority for a non-exclusive exploration permit in the prescribed form and accompanied by the prescribed fee. Section 22(2) The Authority shall issue a non-exclusive exploration permit for a geographically delineated area. Section 22(3) The Authority may issue non-exclusive exploration permits to different persons in respect of different non-exclusive exploration activities in the same geographically delineated area. Section 22(4)(a) the date of issue of the permit; Section 22(4)(b) the area to which the permit relates; Section 22(4)(c) the type of non-exclusive exploration activity for which the permit is issued; Section 22(4)(d) the conditions under which the permit is issued; and Section 22(4)(e) confidentiality requirements. Section 22(5) A person who has been issued with a non-exclusive exploration permit shall provide to the Authority copies and samples of all the data collected by that person. Section 22(6) A person who conducts a non-exclusive exploration survey without being issued with a non-exclusive explorati...

Section 23. Grant of non-exclusive exploration permit Section 23(1) The Authority may issue an applicant with a non-exclusive exploration permit and the Authority may impose such conditions as it may deem fit on the permit. Section 23(2)(a) for inspection by a person applying to inspect such information free of charge; Section 23(2)(b) by supplying a copy to an applicant or, where such information is held by the Authority in electronic form, by submitting such information through electronic means upon payment of a reasonable fee to cover the costs of supplying the information; and Section 23(2)(c) by publishing the information on its website and in such other manner as it may consider appropriate. Section 23(3) The Authority shall inform each County Government affected by the non-exclusive exploration activities of the nature and status of such non-exclusive exploration activities.

Section 24. Operational permits Section 24(1) A contractor who intends to conduct upstream petroleum operations shall apply to the Authority for an operational permit. Section 24(2) The provisions of section 23(2) shall apply with respect to operational permits under subsection (1). Section 24(3)(a) drill a well; Section 24(3)(b) develop and produce petroleum; Section 24(3)(c) construct petroleum gathering systems in the field; Section 24(3)(d) build a crude oil storage facility; Section 24(3)(e) plug or abandon an individual well; Section 24(3)(f) operate an underground injection control well; Section 24(3)(g) convert an individual well to an underground injection control well; Section 24(3)(h) decommission or abandon an upstream petroleum facility; Section 24(3)(i) develop, build, construct or operate a gas processing facility; or Section 24(3)(j) remediate and reclaim upon the abandonment of a well or facility. Section 24(4) A contractor shall apply to the Authority for an operational permit for each well. Section 24(5)(a) drilling permit for exploration, appraisal, development and production wells; Section 24(5)(b) the global positioning system (GPS) location of each well; Sect...

Section 25. Security for compliance and suspension or termination of petroleum agreement Section 25(1) On or before the commencement of the initial exploration period or of any additional exploration period the contractor shall provide a security, in such form to be prescribed in the petroleum agreement guaranteeing the contractor's minimum work and expenditure obligations. Section 25(2) Where a contractor is in default of the contractor's minimum work and expenditure obligations, the Cabinet Secretary may, by reasonable notice in writing served on the contractor, suspend or terminate the petroleum agreement and promptly recall the security. Section 25(3)(a) neglected to remedy the default within the period prescribed in the petroleum agreement or such reasonable notice in writing stating the particulars of the default; and Section 25(3)(b) fails or refuses to respond to the notice additional time as may be granted by the Cabinet Secretary; or Section 25(3)(b)(i) fails or refuses to respond to the notice additional time as may be granted by the Cabinet Secretary; or Section 25(3)(b)(ii) fails or refuses to rectify the default; or Section 25(3)(b)(iii) the contractor has failed to o...

Section 26. Transfer of interest in petroleum agreement Section 26(1) A contractor shall not transfer an interest in a petroleum agreement executed in accordance with this Act without the written permission of the Cabinet Secretary. Section 26(2)(a) the contractor has applied to the Cabinet Secretary for such a transfer in the prescribed form; Section 26(2)(b) the contractor has complied with this Act, the terms and conditions of the petroleum agreement and any other written law; Section 26(2)(c) the person to whom the interest in the petroleum is being transferred has the financial and technical capacity to meet the contractor's obligations under the terms and conditions of this Act and the petroleum agreement; and Section 26(2)(d) the taxes payable with respect to the transaction have been assessed. Section 26(3) The Cabinet Secretary shall not unreasonably withhold permission for the transfer of an interest in a petroleum agreement by the contractor to another person unless there is reason to believe that the transfer of that interest shall be against public interest or safety. Section 26(4)(a) "transfer of interest in petroleum agreement" includes the acquisition of control by...

Section 27. Report of discovery of petroleum Section 27(1) Where a contractor discovers the existence of petroleum or any other resource in Kenya, that contractor shall notify the Cabinet Secretary within forty eight hours of the discovery. Section 27(2)(a) shall be the only person authorized to notify the public of the discovery of petroleum or any other resource by a contractor; or Section 27(2)(b) may authorize a contractor or any other person to notify the public of the discovery of petroleum or any other resource by the contractor. Section 27(3) A contractor who notifies the public of the discovery of petroleum or any other resource without having reported the discovery to the Cabinet Secretary or who notifies the public of the discovery without the approval of the Cabinet Secretary commits an offence and on conviction shall be liable to a penalty of not less than twenty million shillings. Section 27(4) Where any other natural resource is discovered in the course of exploration or production of petroleum, the Contractor shall inform the Cabinet Secretary of the discovery and, where relevant, the Cabinet Secretary shall inform the Cabinet Secretary responsible for matters relat...

Section 28. Notification prior to abandonment Section 28(1) A contractor shall give the Authority a notice of thirty days where the contractor intends to abandon a well. Section 28(2) A contractor shall obtain the written permission of the Authority to close or plug a well. Section 28(3) A person who contravenes the provisions of this section commits an offence and upon conviction shall be liable to a fine of not less than twenty million shillings or to a term of imprisonment of not less than five years or both.

Section 29. Surrender of blocks Section 29(1) A contractor shall surrender all or part of the block in accordance with this Act and the terms of the petroleum agreement. Section 29(2) Where a contractor intends to partially surrender a block, that contractor shall surrender contiguous portions of the block in accordance with this Act and the manner specified the petroleum agreement. Section 29(3) Where a contractor intends to partially surrender a block, that contractor shall submit to the Cabinet Secretary and the Authority the geological and geophysical data in relation to the block. Section 29(4) The surrender of any block shall not affect any liability on the part of the contractor incurred prior to the date of surrender in respect of the block. Section 29(5) Where a contractor surrenders a block or partially surrenders a block, that contractor shall meet that contractor's obligations under the terms of the petroleum agreement, including obligations in relation to decommissioning costs.

Section 30. Development Section 30(1) Where a commercial field is established, such field shall be developed by the contractor within such time as may be prescribed in this Act and the petroleum agreement. Section 30(2)(a) proposals for the development of and production from the field; Section 30(2)(b) an assessment of whether the development of and production from the field should be subject to unitization or joint upstream petroleum operations in accordance with the provisions of this Act; Section 30(2)(c) an assessment of how to coordinate upstream petroleum operations with other contractors, including the joint use of facilities subject to this Act and any other applicable law; Section 30(2)(d) the estimated number, size and production capacity of production platforms, if any; Section 30(2)(d)(i) the estimated number, size and production capacity of production platforms, if any; Section 30(2)(d)(ii) the estimated number of production wells; Section 30(2)(d)(iii) the particulars of production equipment and facilities; Section 30(2)(d)(iv) the particulars of feasible alternatives for transportation of petroleum including pipelines; and Section 30(2)(e) any other relevant informat...

Section 31. Ratification by Parliament Section 31(1) The Cabinet Secretary shall, within thirty days of the approval of a field development plan submitted in accordance with the terms of a production sharing contract entered into under this Act, submit the production sharing contract together with the field development plan to Parliament for ratification in accordance with Article 71 of the Constitution. Section 31(2)(a) ratify the production sharing contract and the field development plan; or Section 31(2)(b) refuse to ratify the production sharing contract and the field development plan and refer the documents back to the Cabinet Secretary for reconsideration stating the reasons for the refusal. Section 31(3) Parliament shall, in carrying out its obligation under subsection (2), undertake public participation. Section 31(4) The Cabinet Secretary shall, upon accordance refusal under subsection (2)(b), consider the reasons and reservations on their merits and resubmit the same to Parliament for approval. Section 31(5) If Parliament does not make a decision under subsection (2) within ninety days, the production sharing contract and the field development plan shall be deemed to have...

Section 32. Petroleum production Section a report on the petroleum reservoir;

Section 33. Variations or alterations in field development plan Section 33(1) The contractor shall inform the Authority of any significant deviation in or alteration of the terms and conditions under which a field development plan has been submitted or approved as well as any significant alteration of facilities or use of facilities. Section 33(2) On receiving information under subsection (1), the Authority may approve the variation or alteration of terms and preconditions under which a plan has been submitted or approved as well as any significant alteration of facilities, or may in the alternative require a new or amended plan to be submitted for approval. Section 33(3) A person who contravenes the provisions of this section commits an offence and on conviction, shall be liable to a penalty of not less than ten million shillings or to imprisonment for a term of two years or to both.

Section 34. Natural gas Section development or utilization of associated natural gas by the national government where the contractor does not intend to develop or utilize the associated natural gas;

Section 35. Restriction on removal of petroleum and samples Section 35(1)(a) with the written consent of the Authority, for the purpose of sampling or analysis; Section 35(1)(b) in the case of a contractor, in accordance with the conditions of the petroleum agreement; or Section 35(1)(c) as otherwise permitted by this Act. Section 35(2) Any person who contravenes the provisions of subsection (1) commits an offence and is liable on conviction to a fine of not less than twenty million shillings or to imprisonment for a term of not less than five years or to both.

Section 36. Unitization Section 36(1) Subject to the provisions of section 28, where a contractor discovers petroleum or any other resource in the area where the contractor is authorized to conduct upstream petroleum operations and the discovery extends beyond that area, the contractor shall inform the Cabinet Secretary within seven days of the discovery. Section 36(2) Where a discovery is made under this section extends to an area where a separate petroleum agreement operates, the Authority may require that the petroleum or other resource shall be developed and produced in accordance with a unitization agreement. Section 36(3) A unitization agreement shall be an agreement between contractors who hold separate petroleum agreements on blocks that are adjacent or contiguous to each other for the joint development or production of petroleum from the separate blocks. Section 36(4) Where the Authority requires contractors to develop or produce petroleum under a unitization agreement, the contractor shall prepare a joint development and production for the petroleum and submit the plan to the Authority for review within eighteen months from the date of the making of the unitization agreem...

Section 37. Third party access to infrastructure Section 37(1) A person who owns infrastructure used for upstream and midstream petroleum operations shall provide access to that infrastructure to third parties under such reasonable conditions: Provided that there are no significant technical challenges that shall prevent the utilization of the infrastructure by third parties. Section 37(2)(a) the expansion shall not have an adverse impact on the technical integrity and safety of the infrastructure; and Section 37(2)(b) the third parties bear the cost of the expansion. Section 37(3) An agreement for the use by third parties of the infrastructure for upstream and midstream petroleum operations shall be submitted to the Authority for approval by the owner of the infrastructure.

Section 38. Segmentation Section 38(1) A contractor engaged in upstream petroleum operations in accordance with a petroleum agreement shall not have proprietary rights or control of any downstream petroleum operations. Section 38(2) Despite subsection (1), where the contractor conducting upstream petroleum operations is a subsidiary company of another company, that other company may conduct midstream or downstream operations or another subsidiary company of that other company may conduct midstream or downstream petroleum operations.

Section 39. Petroleum field decommissioning plan Section 39(1) A contractor shall submit a field decommissioning plan to the Authority before a production permit to install and operate the facilities is issued. Section 39(2) The plan referred to in subsection (1) shall contain proposals for continued production or shut down of production, decommissioning of facilities and any other information required under the regulations. Section 39(3) The decommissioning of facilities referred to in subsection (2) may constitute further use of the facilities in the upstream petroleum operations, other uses, complete or partial removal and disposal or abandonment. Section 39(4) The Authority may on receipt of the plan require further information and evaluation, or may require a new or amended decommissioning plan. Section 39(5) The contractor may from time to time as directed by the Authority update the decommissioning plan as shall be provided for in the regulations made under this Act.

Section 40. Decommissioning funds Section 40(1) There shall be established a decommissioning fund for each development area or for other facilities operated in relation to a production permit under this Act for the purpose of costs related to the implementation of a decommissioning plan as provided in the petroleum agreements. Section 40(2) The decommissioning fund shall be applied to the implementation of activities approved in the decommissioning plan. Section 40(3)(a) the petroleum production has reached fifty percent of the aggregate recoverable reserves as determined in an approved development plan and any successive re-appraisal of such initial recoverable reserves; or Section 40(3)(b) ten years before the expiry of the production permit. Section 40(4) For every subsequent first calendar quarter in which petroleum is produced or a facility operated, the Authority shall charge the contractor a portion of the estimated future cost for decommissioning of facilities to be deposited in the fund. Section 40(5) The amount deposited in the decommissioning fund shall be charged as operating cost subject to the cost recoverable limitations stipulated in the petroleum agreement or as ma...

Section 41. Notification of termination and decommissioning Section 41(1) The contractor shall notify the Authority of the date and time of intended termination of use of a facility if the said use is expected to terminate permanently before the expiry of the production permit. Section 41(2) Decommissioning shall be scheduled to occur after a producing field reaches its economic limit. Section 41(3) Decommissioning shall be carried out as provided for in this Act, the petroleum agreement and the decommissioning plan.

Section 42. Disposal of decommissioned facilities Section 42(1) The Authority may issue directions relating to the time limit for disposal of decommissioned facilities: Provided that all decommissioned facilities shall revert to the National Government. Section 42(2) Directions issued under subsection (1) shall take into consideration factors such as the economic efficiency, technical viability, safety and any environmental concerns as well as consideration for other users. Section 42(3) A contractor shall comply with the directions of the Authority regarding the disposal or decommissioning of upstream petroleum operations even where a production permit has lapsed. Section 42(4) Where the ownership of a facility has been transferred in accordance with this Act, the contractor and the owners shall comply with the directions of the Authority in relation to the disposal or decommissioning of the facilities. Section 42(5) The Authority direct that facilities used in upstream petroleum operations shall continue to be used for upstream petroleum operations by another contractor or for other purposes and the other contractor or other user of the facilities shall comply with the directions...

Section 43. Removal of property by the contractor Section 43(1)(a) remove from the area which was subject to the production permit all property brought into that area by any person engaged or concerned in the upstream petroleum operations authorized by the production permit or to make arrangements that are satisfactory to the Authority with respect to that property; Section 43(1)(b) apply to the Authority for a plug and abandonment permit to plug all the wells drilled in that area; and Section 43(1)(c) take any action for the conservation and protection of the natural resources and the environment in that area. Section 43(2) A direction given under subsection (1) shall be consistent with best petroleum industry practices, and nothing in this section or in any direction shall be construed as requiring any person serving or having served as the contractor to do anything contrary to best petroleum industry practices. Section 43(3) A person to whom directions are given under subsection (1) who refuses or neglects to comply with such directions within the period specified in the notice, commits an offence and shall on conviction be liable to a fine not less than ten million shillings or...

Section 44. Liability for damages for disposal of decommissioned facility Section 44(1) A person obligated to implement directions relating to disposal of a decommissioned facility under this part shall be liable for damage or loss arising in connection to the disposal of the facility or other implementation related thereto. Section 44(2) Where the contractor abandons a facility, the contractor shall be liable for any damage or loss caused in connection with the abandoned facility. Section 44(3) Where there is more than one party liable under sub section (1) or (2), they shall be held jointly and severally liable for all financial obligations, penalties and/or liabilities. Section 44(4) Where a decision is made to abandon the facility, it may be agreed between the contractor and the National Government that future maintenance, responsibility and liability be assumed by the National Government based on agreed financial compensation as provided for in the regulations.

Section 73. Granting of licences Section 73(1) A person may make an application for a licence, permit or certificate to the licensing authority in the manner prescribed by this Act or the licensing authority. Section 73(2)(a) grant a licence, permit or certificate accordingly, either without conditions or subject to such conditions as the licensing authority may deem fit and shall be accompanied by the prescribed fee; or Section 73(2)(b) reject an application for grant of such licence, permit or certificate. Section 73(3) Where the licensing authority rejects an application for the grant a licence, permit or certificate, the licensing authority shall give to the applicant reasons for the refusal in writing within seven days of such refusal.

Section 74. Requirements of licence for petroleum business Section 74(1)(a) undertake refining, importation, export, bulk storage or transportation of petroleum crude or products must have a valid licence issued by the Authority; Section 74(1)(b) sell petroleum in bulk to another person for the purpose of export or for retail sale in Kenya must have a valid licence issued by the Authority; Section 74(1)(c) use a vehicle for the purpose of transporting petroleum in bulk shall have a valid petroleum permit in respect of that vehicle issued by the Authority; and Section 74(1)(d) drive a vehicle, or engage a driver, for the purpose of transporting petroleum in bulk by tanker shall ensure that such driver is certified for that purpose by the Authority. Section 74(2) A person who wishes to carry out the supply of petroleum products by means of a retail dispensing station, or of gas through a centralised reticulation system, must have a licence issued by the County Government: Provided that any retail dispensing station or gas reticulation system complies with section 86 on construction permits and are operated in accordance with National guidelines published by Authority. Section 74(3)(a...

Section 75. Factors to be considered in reviewing an application Section the impact of the undertaking on the social, cultural or recreational life of the community;

Section 76. Forms and conditions of a licence or permit Section 76(1)(a) the provisions for tariffs or charges for the pipeline transport, common user import handling facilities or jetties and storage; Section 76(1)(b) the duration of the licence or permit; Section 76(1)(c) the maximum capacity, whether of import handling, storage, or transport; Section 76(1)(d) the market area segments; and Section 76(1)(e) any other matter connected with the carrying on of the undertaking. Section 76(2)(a) a requirement that the licensee shall comply with all applicable environmental, health and safety laws; Section 76(2)(b) a stipulation that the licensee is subject to liability under tort and the contract laws; and Section 76(2)(c) a requirement that all necessary fees associated with the licence or permit shall be paid on a timely basis. Section 76(3) A licence or permit issued under this Act may not be altered, revised or modified, except with the consent of the licensee.

Section 77. Renewal of Licences Section 77(1) An application for renewal of a licence, permit or certificate shall be made at least thirty days before the expiry date of the existing licence, permit or certificate and shall be accompanied by the prescribed fee. Section 77(2) If the licensing authority is satisfied that the applicant continues to meet the requirements of the licence, permit or certificate, the licensing authority shall renew the licence, permit or certificate. Section 77(3) Where an application for renewal of a licence, permit or certificate has been made before the expiry of the licence, permit or certificate but has not been approved or rejected by the licensing authority when the licence, permit or certificate is due to expire, the licence, permit or certificate continues in force until the application for renewal is dealt with and any renewal in such a case shall be taken to have commenced from the day when the licence, permit or certificate would have expired before the renewal. Section 77(4) A licence or permit shall specify the nature of petroleum business and the premises at which the licensee may conduct his business and where a petroleum business is conduc...

Section 78. Amendment of licence, permit or certificate Section 78(1) A person may make an application for amendment of a licence, permit or certificate. Section 78(2) An application under subsection (1) shall be in the prescribed manner and be accompanied by the prescribed fee. Section 78(3) The licensing authority may amend the licence, permit or certificate and endorse it accordingly. Section 78(4) Where an application to amend a licence, permit or certificate is rejected, the licensing authority shall notify the applicant of the reasons in writing. Section 78(5) A licence, permit or certificate amended under this section shall retain the existing expiry date. Section 78(6) An applicant dissatisfied with the decision of the Cabinet Secretary under subsection (2), may appeal to the Tribunal within thirty days of the receipt of such decision.