Royal Decree No. 8/2011 - Oil and Gas Law

Last updated: 11 April 2022

The Oil and Gas Law sets out broad and general responsibilities for Oman’s hydrocarbon sector. It regulates all oil and gas production, transportation, and marketing.  It states that the Sultanate of Oman owns all hydrocarbons and mineral resources existing in Oman. Entitlement to these resources is passed on to a concession holder through a granting instrument. This usually takes the form of Exploration and Production Sharing Agreements (EPSAs), which set out the specific rights and obligations of parties to explore or exploit hydrocarbons in Oman.

Thus, the legislation prohibits any natural or juristic person from importing, exporting or transporting of petroleum substances, storing, distributing, manufacturing, marketing or carrying out any other operations without a license from the Ministry of Oil and Gas (MOG) in accordance with the terms and conditions and upon payment of fees prescribed by a decision of the Minister after coordination with the Council of Financial Affairs and Energy Resources.  

It further outlines that concession owners shall enable the relevant staff of the MOG to access all records and documents relating to operations and to obtain copies of them, as well as to inspect all facilities and equipment that are used in operations. In addition, incidents that pose a threat to the rights of the concession owner or others or threaten the environment or public property or cause serious injury to workers must be notified.

Chapter 6 of this law requires operations to be carried out with due consideration to environmental protection, caution, and according to best practice and to international commitments of the sultanate. It defines that concession owners shall not dispose of any gas unless necessary, taking the appropriate means to protect the environment. They shall also take necessary precautions to prevent the leakage of petroleum and to prevent pollution of all kinds. Moreover, they shall reduce emissions of greenhouse gases in the concession area using adequate techniques and means for environmental control.

The law also addresses natural gas regulations and states that the concession holder must use associated gas based on the following priorities: use within oil operations, commercial use, injection for enhanced oil recovery, underground storage, and finally other purposes defined by the ministry. To encourage this, a concession may include incentives, such as an extension of the gas exploration period, unification of small gas discoveries in a single commercial field, or a reduction of economic demands on concession holders.

Article 16 specifies that the concession holder must restore the concession area to its natural state within the time limits set by the Oil and Gas Ministry (MOG). In the absence of such actions, the MOG may undertake the necessary work and charge the concession holder all required costs and expenses plus 10 % of this value.

This regulation also lays out applicable penalties.

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