Rwanda moves to pass petroleum law to regulate oil exploration

Following oil and gas discoveries in neighbouring countries, the likelihood of Rwanda making similar discoveries is high. This has seen the government embark on enacting a petroleum law, which if passed will regulate all oil exploration and extraction activities in the country.

The draft Law on Petroleum Exploration and Production is hinged on article 30 of the Constitution, which says that private ownership of land and other rights related to land are granted by the State.

The law was also developed to respond to the Upstream Petroleum Policy adopted by the Cabinet on June 12 2013 to regulate the petroleum industry.

“Recent oil and gas discoveries in East African countries, with which we share the same geology, have been a motivation for Rwanda to start exploration for petroleum resources thus creating the upstream sector,” read part of the policy document.

The law also aims at creating a conducive business environment for petroleum operations, as well as establishing a progressive fiscal framework that encourages further investment in the petroleum industry while optimising government revenues.

The other function is to promote transparency and openness in the administration of the petroleum resources of Rwanda, ensuring a health and safe environment in the course of petroleum operations, and creating a sustainable petroleum industry.

Parliamentarians asked the Minister of State for Mining, Ivode Imena whether the policy has been sparked by a possibility of existence of some oil deposits in the country, to which he replied that signs are there that the country has oil deposits, but up to now they are just signs.

Despite the absence of a guiding law, the government signed a technical agreement with Vangold, a Canadian company, which later changed to Vanoil, to start oil exploration in the country in 2007. However, before a production agreement could be signed, the government halted the process.

READ: Production share dispute linked to Rwanda oil deal collapse

The government is banking on attracting foreign investors to carry out exploration activities, but the policy also provides for concessions.