1 Legal and regulatory framework
1.1 What role does the national state play in the oil and gas industry in your jurisdiction? Are oil and gas rights owned by the state or is private ownership allowed?
The state is a major player in Cameroon's oil and gas sector. It exercises sovereign rights over petroleum operations – that is, hydrocarbon prospecting, exploration, exploitation, transportation, storage and processing activities.
It is the exclusive owner of all deposits and natural accumulations of hydrocarbons located within the soil or subsoil of the territory of Cameroon.
In accordance with Article 4 of Law 2019/008 of 25 April 2019 to Institute the Petroleum Code (‘Petroleum Code'), natural and legal persons – including landowners – may carry out petroleum operations only with the prior authorisation of the state, through its competent administrative institutions – notably, the president, the Ministry of Mines and the National Hydrocarbons Company. These authorisations are granted within the framework of petroleum contracts and vary depending on the nature of the petroleum operations.
1.2 Which national legislative and regulatory provisions govern the oil and gas industry in your jurisdiction?
The legislative framework governing the oil and gas sector in Cameroon is comprised of the following:
- The Petroleum Code regulates the upstream petroleum sector. It:
- promotes petroleum operations throughout the territory of Cameroon;
- lays down the conditions for upstream hydrocarbon prosecting, exploration, exploitation, transportation, storage and processing; and
- determines the rights and obligations relating to petroleum operations.
- Law 2012/006 of 19 April 2021 to Institute the Gas Code (‘Gas Code') regulates the downstream gas sector – notably, the transportation, distribution, processing, storage, importation, exportation and marketing of natural gas and its by-products within the national territory.
- Law 2011/25 of 14 December 2011 on the Development of Associated Gas. This law sets out the modalities that foster the recovery of flared or released gas for commercialisation. Associated gas is gas found in the form of solutions in crude oil and separated from it during extraction.
- Law No 85-05 of 4 July 1985 relating to the Modalities for expropriation for Public Utility Causes and Laying Down Modalities for Compensation sets out the conditions under which holders of petroleum exploration and exploitation licences may gain access and compensate landowners subject to petroleum operations licences.
- Law 96/12 of 15 August 1996 relating to Environmental Management (‘Environmental Law') sets out the conditions under which petroleum operators carry out petroleum operations in strict compliance with environmental protection measures.
- Decree 2000/465/PM of 30 June 2000 Laying Down the Conditions for the Implementation of the Petroleum Code sets out the necessary formalities and documents needed to carry out upstream petroleum operations as provided for by the Petroleum Code.
- Decree 2014/3438 of 27 October 2014 Laying Down the Modalities for the Application of Law 2012/006 on the Gas Code sets out the formalities and documents needed to carry out downstream petroleum operations.
- Decree 2013/1205/PM of 18 March 2013 Laying Down the Modalities for the Application of the Law on the Development of Associated Gas. It sets out the conditions to exploit gas found in the form of solutions in crude oil which are separated during extraction.
- Decree 2019/342 of 9 July 2019 on the Transformation of the National Hydrocarbon Company into a Public Stock Company empowers the National Hydrocarbons Company to:
- negotiate petroleum contracts on behalf of the state; and
- supervise the execution of petroleum contracts signed between the state and the operators.
1.3 What other national legislative and regulatory provisions have relevance for oil and gas activities in your jurisdiction?
- Law 2013/004 of 18 April 2013 Laying Down Incentives for Private Investments in the Republic of Cameroon sets out the different incentives available to investors in the Cameroon economy and the conditions for benefiting therefrom.
- The Organization for the Harmonization of African Business Law Uniform Act on Commercial Companies and Economic Interest Groups sets out the different corporate forms available to investors in Cameroon and the modalities for their management.
- Regulation 02/18/CEMAC/UMAC/CM of 21 December 2018 on Exchange Control Regulations. This law sets out the conditions for foreign direct investments in Cameroon and the conditions for the exportation of petroleum produce and the considerations for the transfer of funds and dividends internationally.
- Law 2015/018 of 21 December 2015 Regulating Commercial Activities sets out the conditions under which foreign-owned companies may carry out activities in Cameroon.
- Law 92/007 of 14 August 1992 on the Labour Code of Cameroon lays down the conditions for the employment of national and expatriates in Cameroon.
1.4 Are there any regional treaties or laws that need to be taken into account?
Cameroon is a member of the Extractive Industries Transparency Initiative, which aims to promote open and accountable management of oil and gas mineral resources.
1.5 Which national regulatory bodies are responsible for enforcing the applicable laws and regulations? What powers do they have?
Ministry of Mines, Industry and Technological Development: This ministry is generally empowered to:
- supervise the upstream petroleum sector;
- represent the state together with the National Hydrocarbons Company in the signing of petroleum contracts;
- grant authorisations for prospecting for hydrocarbons;
- submit request for expropriation of private lands which are subject to authorisation for petroleum operations titles before the Ministry of Lands and Domains;
- issue prior approval of any deed or draft thereof whereby the holder assigns or promises to assign, in whole or in part, rights and obligations resulting from a petroleum contract,
- issue prior approval for a change of control of holders of petroleum contracts;
- issue prior approval for the withdrawal of a co-holder of a petroleum contract; and
- issue approval for the relinquishment of all or part of an exploration authorisation over the surface area covered by that authorisation.
Ministry of Water and Energy Resources: This ministry is generally empowered to:
- regulate the downstream petroleum sector;
- negotiate and sign gas agreements on behalf of the state;
- grant concessions for gas transportation and distribution;
- issue licences for gas processing, storage, import and export;
- issue authorisations for gas sale and import; and
- determine, together with operators, the price of gas products.
It also exercises administrative supervision over the National Refining Company and the Cameroon Company for Petroleum Storage.
Ministry of Environment, Protection of Nature and Sustainable Development: This ministry is responsible for ensuring that petroleum operators respect measures aimed at protecting the environment and nature. In this regard, it is responsible for approving environmental and social impact assessments of petroleum operations in Cameroon. The aim of the environmental impact assessment is:
- to determine the direct or indirect incidence of petroleum operations on the ecological balance of the zone where the operations will be carried out; and
- to ascertain the impact of such operations on the physical environment and quality of life of the population.
1.6 What is the national regulators' general approach in regulating the oil and gas industry?
In recent years, the regulators have adopted an investor-friendly approach while still protecting the local market. This approach is reflected in the Petroleum Code, which was adopted for the upstream petroleum sector on 5 April 2019 to replace the code of 22 December 1999. The Petroleum Code offers incentives to local and foreign petroleum companies with the requisite technical and financial capacity and with concrete investment projects. These incentives range from a waiver of payment of the signature bonus to the state to corporate tax exemptions.
In terms of protecting the local market, the regulators are keen to ensure that the domestic market is properly supplied, and that local content requirements are respected by foreign operators – that is, requirements in relation to:
- local capacity building;
- use of local human and material resources;
- use of local technologies; and
- use of local industrial and service companies.
Petroleum contract holders are bound, as a matter of priority and in the case of equal competence, to recruit qualified Cameroonians in all socio-professional categories and for all positions when conducting their petroleum operations. They are equally required, as a matter of priority, to award contracts for construction, insurance and supply of goods and services to Cameroon companies.
1.7 What role do provincial, state and/or other local government regulatory bodies play in the regulation of the oil and gas industry?
The state – through the Ministry of Mines for the upstream sector and the Ministry of Water and Energy for the downstream sector – plays a licensing and supervisory role, in conjunction with the National Hydrocarbons Company. For a detailed understanding of the different state actors involved in the regulation of the oil and gas sector, see question 1.5.
2 Oil and gas industry
2.1 How mature is the oil and gas industry in your jurisdiction?
Cameroon has a mature oil and gas industry. Oil prospecting began in 1947. The first commercial discoveries were made in the Rio del Rey basin in 1972; but it was not until 1977 that the country became an oil producer, with the first ton of oil produced from the Kole field. Production reached the record level of 186,000 barrels a day in 1985. However, from 1986, production began to decline. Faced with this situation, the government introduced incentives to boost exploration and production. Thanks to these measures and the efforts made by the National Hydrocarbons Company to curb the decline – which was notably linked to ageing fields – international oil companies gained renewed interest in Cameroon's mining sector. As of 30 June 2021, more than 20 exclusive prospecting and exploitation authorisations had been granted.
Gas production began in 2012. Since 2018, Cameroon has been an exporter of liquefied natural gas (LNG). According to the National Hydrocarbons Company, LNG production is estimated at 1.2 million tonnes per year.
2.2 What are the key oil and gas products which are produced in your jurisdiction and where are activities typically based?
The key hydrocarbon products produced in Cameroon are:
- crude oil;
- gas; and
- liquified petroleum gas.
According to the National Hydrocarbons Company, during the first quarter of 2021:
- oil production stood at 8.419 billion barrels; and
- gas production stood at 27.267 billion cubic feet.
The following petroleum products are also produced by the National Oil Refinery:
- jet fuel;
- fuel oil; and
Oil production takes place in various blocks located within two sedimentary basins:
- the Rio del Rey basin, which is about 7,000 square kilometres and is located in the southwest region of Cameroon; and
- the Douala/Kribi Campo Basin, which is about 19,000 square kilometres, of which 7,000 kilometres are onshore.
2.3 Who are the key players in the oil and gas industry in your jurisdiction?
The main player in the Cameroon oil and gas industry is the National Hydrocarbons Company. Its competences are set out in Decree 2019/342 on the Transformation of the National Hydrocarbon Company into a Public Stock Company and are as follows:
- representing the state, together with the Ministry of Mines, in relation to the signature of petroleum contracts;
- carrying out all studies relating to liquid and gaseous hydrocarbons;
- conducting negotiations on petroleum and gas contracts in cooperation with:
- the Ministry of Finance;
- the Ministry of Mines;
- he Ministry of Economy;
- the Ministry of Environment; and
- the Ministry of Commerce;
- conducting negotiations in relation to the official prices of crude oil;
- commercialising the state's portion of hydrocarbon production;
- signing contracts with companies in relation to the prospecting, exploration, production, storage, commercialisation, trading and distribution of liquid and gaseous hydrocarbons; and
- financing, on behalf of the state, all operations carried out by the state in managing liquid and gaseous hydrocarbons.
2.4 How are the following reflected in the domestic energy mix?
(a) Oil and gas
(b) Imports and exports?
(a) Oil and gas
Oil and gas play a very important role in the Cameroon economy, for both domestic and industrial purposes. They also make a significant contribution to gross national product. The state continually invites national and international investors with the requisite financial and technical means to maximise oil production in the country.
(b) Imports and exports
The state, through the Ministry of Water and Energy Resources, has recently been making international calls for the supply of gas to satisfy local demand. For instance, on 26 April 2021, international calls were made for the supply of 390,000 metric tons of gas for the months of July, August and September 2021. The increase in imports was due to a fire that greatly damaged the National Oil Refinery, which is the only oil refinery in Cameroon.
3 Exploration and production
3.1 What rights are required to undertake exploration and production in your jurisdiction? Do these vary depending on the type or location of the activity?
Exploration and production activities in Cameroon are subject to the grant of an authorisation, depending on the nature of the activities. These authorisations include the following:
- Prospecting authorisations: These are granted to natural and legal persons by the minister of mines for areas not covered by petroleum contracts. They confer on the holder the non-exclusive right to carry out preliminary prospecting within a specified area. They do not constitute hydrocarbon mining titles and are not transferable or assignable.
- Exploration authorisations: These are granted following a petroleum contract and may either be:
- exploration permits in the case of concession contracts; or
- exclusive exploration authorisation in the case of production sharing contracts or risk service agreements.
Exploration authorisations are granted by decree of the president. However, the signing of a petroleum contract is considered to constitute the grant of the exploration authorisation, which is subsequently materialised by decree of the president. They confer on the holder the exclusive right to carry out, at its own risk and expense, hydrocarbon prospecting and exploration activities within the limits of the relevant area, except as may otherwise be provided for in the petroleum contract. Exploration authorisations are granted for an initial maximum period of three years. This initial period may be extended to a maximum period of five years in the case of special petroleum operations zones. In any case, the initial grant period may be extended twice for periods of two years.
- Provisional exploitation authorisations: These are granted to the holders of exploration authorisations. They confer on the holder the right to carry out prolonged production tests and/or operate productive wells on a provisional basis for a maximum of period of two years, during which the holder will be required to continue delineation and assessment of the commercial exploitability of the relevant deposit. They are granted by the president.
- Exploitation authorisations: An exploitation authorisation attached to a petroleum contract may be either an exploitation concession in the case of concession contract or an exclusive exploitation authorisation in the case of a production sharing contract or risk service contract. It confers on the holder the exclusive right to carry out, at the holder's risk and expense, all petroleum operations within the limits of the relevant area, as well the right to dispose of all or part of the hydrocarbon production in accordance with the terms of a petroleum contract. It is granted by the president for an initial period of 25 years for liquid hydrocarbons and 35 years for gaseous hydrocarbons. The exploitation authorisation may be renewed once at the holder's request for a maximum additional 10 years.
- Domestic transportation authorisation: This grants the holders of exploitation authorisations the right to transport the products of their exploitation activities or a share thereof to any collection, export, processing, refining or storage point within the territory of Cameroon, using their own facilities or those of third parties, while maintaining ownership rights.
3.2 What regulatory or contractual requirements must be satisfied to obtain exploration and production rights?
For an investor to exercise the petroleum rights outlined in question 3.1, the investor must sign a petroleum contract.
A petroleum contract must be concluded between the state and the investor, with the state being represented by the Ministry of Mines and the National Hydrocarbon Company.
The following petroleum contracts are offered under the Cameroon legislation:
- Concessions: These are granted for hydrocarbon mining titles consisting of exploration permits and, where applicable, exploitation concessions. They must be entered into before the grant of a hydrocarbon exploration permit. They define the rights and obligations of the state and the holder during the exploration permit validity period and, in the event of a discovery of a commercially exploitable hydrocarbon field, during the validity period of the exploitation concessions attached thereto. The concession contract holder is responsible for:
- financing the petroleum operations in accordance with the terms and conditions of the contract; and
- disposing of the hydrocarbons extracted during the validity period, subject to the right of the state to collect royalties in kind.
- Product sharing contract: In a production sharing contract, the government seeks the services of a holder to exclusively carry exploration within a certain area on its behalf, and to carry out exploitation in the event of a discovery of a commercially exploitable hydrocarbon field. The holder is responsible for the financing of the petroleum operations. The petroleum operations under a production sharing contract will be the subject of either:
- an exclusive exploration authorisation; or
- an exclusive exploitation authorisation covering the exploitation of a commercially exploitable hydrocarbon field.
- Under a production sharing contract, hydrocarbon production will be shared between the state and the holder in accordance with the terms of the contract.
- Risk service contract: A risk service contract confers exclusive hydrocarbon exploration and exploitation rights within a specified area on a qualified person, which assumes all the financial risk. The holder of a risk service contract is remunerated in cash.
3.3 If there is state ownership of oil and gas rights in your jurisdiction, what is the procedure for obtaining exploration and production rights? How long does this typically take?
To obtain petroleum exploration and production rights, an investor must obtain authorisation from the state. The authorisation is usually granted after a tender process in which petroleum blocks are offered for competitive bid. In some cases, the state may directly award blocks without a tender process.
There is no statutory deadline within which the state must grant applications for petroleum exploration and exploitation authorisations. However, the process usually takes about six months if the application file is properly deposited.
3.4 Who can own exploration and production rights in your jurisdiction? Do specific requirements or restrictions apply to foreign operators? Do any indigenous ownership requirements apply?
There are no restrictions under Cameroon law on who can own petroleum exploration and production rights. Foreigners can freely seek and obtain hydrocarbon exploration and exploitation authorisations. There are equally no indigenous ownership requirements.
3.5 If there is state ownership of oil and gas rights in your jurisdiction, what fees and other charges are incurred in obtaining exploration and production rights?
The following fees are payable to obtain exploration and production rights in Cameroon:
- Prospection authorisation:
- Grant: CFA 6 million.
- Renewal: CFA 6 million.
- Exploration permit:
- Grant: CFA 15,000 per square kilometre.
- Renewal: CFA 10,000 per square kilometre.
The minimum to be received by the government is CFA 60 million, irrespective of the surface area.
- Provisional exploitation permit:
- Grant: CFA 250 million.
- Exploitation concession:
- Grant: CFA 250 million.
- Renewal: CFA 250 million.
- Transfer: CFA 250 million.
- Signature bonus: This is to be determined in the petroleum contract
3.6 What is the duration of exploration and production rights? What is the process for renewal?
Exploration rights are granted by decree of the president for an initial period of three years or five years where they relate to special petroleum operations – that is, operations carried out in areas which require greater effort, particularly regarding factors such as:
- the type of production, nature, composition and quality of the hydrocarbons;
- the enhanced recovery techniques used;
- the water depth for deep offshore located within Cameroon's exclusive economic zone;
- the type of terrain;
- the distance from means of transportation; and/or
- the fragility of the environment.
Exploration rights may be extended twice for periods of two years. Where the investor intends to renew exploration rights, it must notify the Ministry of Mines 30 days before their expiration. The exploration rights will remain valid until the Ministry of Mines has issued its decision on the renewal authorisation.
Hydrocarbon exploitation rights are granted by the president for a period of:
- 25 years for liquid hydrocarbons; and
- 35 years for gaseous hydrocarbons.
This can be renewed once for a period of 10 years. Applications for renewal must be submitted to the Ministry of Mines at least three years before expiration of the licence.
3.7 What are the operator's rights and obligations under exploration and production rights?
The holders of petroleum exploration and exploitation rights must be diligent and act in accordance with current standards and practices in the international petroleum industry.
They may subcontract to qualified enterprises the petroleum operations for which they are responsible. Subcontracts of a value above the ceiling amount specified in the petroleum contract must be disclosed to the Ministry of Mines. Where the holder of a petroleum contract, acting as operator, delegates petroleum operations to another holder equally acting as an operator for less than 12 months, the holder must seek the prior authorisation of the Ministry of Mines.
The holders of petroleum rights must comply with relevant health and safety standards during the petroleum operations in accordance with local legislative and regulatory provisions and current international petroleum industry practices.
In case of commercial hydrocarbon production, and where the state so requests in order to satisfy the needs of the Cameroonian market, the holders of petroleum rights must, as a matter of priority, sell to the state or any duly mandated government body the share of hydrocarbon production to which they are entitled.
The holders of petroleum rights must take out local insurance policies to cover civil liability and damages resulting from the conduct of petroleum operations.
They must further carry out the petroleum operations in such a manner as to ensure, under all circumstances, the conservation of natural resources – in particular, hydrocarbon deposits – and the due protection of essential features of the environment. In this regard, they must take all necessary measures to:
- preserve the safety of persons and property; and
- protect the environment, the natural surroundings and the local ecosystem.
3.8 Are there any requirements re relinquishment of exploration and production rights or part of the area covered by such rights?
In accordance with Article 24 of the Petroleum Code, the holder of an exploration authorisation may relinquish all or part of its rights over the surface area covered by the authorisation by giving two months' notice to the minister of mines. The relinquishment will take effect from the date of its approval by the minister and will result in the cancellation of the authorisation over the area covered by such relinquishment.
With regard to exploitation authorisations, Article 25 of the Petroleum Code provides that such rights can be relinquished in whole or in part, provided that:
- one year's notice is given to the minister of mines; and
- the holder has fulfilled all obligations laid down in the petroleum contract and the regulations in force – especially with regard to environmental protection and the abandonment of deposits and wells.
3.9 Can exploration and production rights be transferred or assigned? If so, how and subject to what government consents? Do any fees, taxes or other charges apply to direct or indirect transfers?
As per Article 19 of the Petroleum Code, the rights and obligations under petroleum contracts exploration authorisations, provisional exploitation authorisations, exploitation authorisations and domestic transportation authorisations may be assigned in whole or in part, subject to the prior approval of the minister of mines and the signing of an amendment thereto where those rights derive from a petroleum contract, under the terms and conditions laid down in the contract and the regulations in force.
Where the rights to be assigned were granted by presidential decree – as is the case with exploration authorisations, exploration authorisations, transportation authorisations and provisional exploitation authorisations – such rights will be effectively assigned by a new decree signed by the president. The petroleum contract holder must submit to the minister of mines for prior approval any deed or draft deed thereof, whereby the holder assigns or promises to assign, in whole or in part, the rights and obligations resulting from the petroleum contract. This also applies where there is a change of control in the petroleum contract holder.
3.10 Can security be taken over exploration and production rights?
Yes. However, the security deed must be approved by the minister of mines.
3.11 What contractual or regulatory provisions apply with regard to cessation of exploration and production or abandonment of exploration and production rights?
The holders of petroleum exploration and exploitation rights may not cease or abandon the rights given to them without following the procedure for relinquishment of such rights.
Where the holder of an exploration or exploitation authorisation does not fulfil the works and expenditure obligations required of it, Articles 34 and 47 of the Petroleum Code respectively states that the state may claim:
- compensation equal to the cost of the unfulfilled obligations; and
- withdrawal of the petroleum authorisation.
Withdrawal of the petroleum authorisation or cancellation of the petroleum contract does not release the holder from its contractual or third-party obligations due on the date of the withdrawal or cancellation. These include obligations to restore the site and financial, tax and social obligations.
4 Surface rights
4.1 Does the law of your jurisdiction distinguish between exploration and production rights and surface rights? If so, how does an owner of exploration and production rights acquire surface rights?
Yes. The grant of hydrocarbon exploration and exploitation rights does not automatically grant the holder rights over the land in relation to which the hydrocarbon rights are granted.
In accordance with Article 58 of the Petroleum Code, where the land on which the exploration or exploitation works will be carried out includes national land and private or public state land, authorisations for land use will be granted by decree of the prime minister.
Where the land use relates to private land owned by natural and legal persons, the minister of mines will submit an expropriation request to the minister of lands and domains for the state to acquire such land and place it at the disposal of the holder of the hydrocarbons authorisation.
4.2 Where surface rights are acquired, what are the operator's rights and obligations as regards the landowner? And what are the landowner's rights and obligations as regards the operator?
Once surface rights have been granted, the operator will be responsible for:
- paying any compensation for expropriation due to the private landowners; and
- ensuring that the petroleum operations are conducted in an environmentally friendly manner.
4.3 Is there a process for the mandatory acquisition of surface rights? If so, what does this involve?
The grant of exploration or exploitation rights does not in itself grant rights over the land covered by the authorisation.
To obtain the right to use land, the holder of an authorisation or a petroleum contract must submit a land enquiry file to the Ministry of Land and Domains. The purpose of the enquiry file is to:
- determine the status of the land covered by the authorisation or petroleum contract;
- identify the holders of the rights and property on portions of the land concerned;
- inform those persons of the conditions for compensating them for the loss of their rights; and
- inform the population of the petroleum operations.
Following submission of the enquiry file, rights to the land may be granted to the holder of the petroleum authorisation by decree of either:
- the prime minister, where it concerns state lands or private property of the state; or
- the minister of lands and domains, where it concerns private property and an expropriation procedure has been launched and the initial holder of the land rights has been compensated.
4.4 Are any native title issues applicable?
Yes. Native holders of land titles and communities occupying such land must be compensated before the land can be used for petroleum operations.
4.5 Are any other rights needed to use the land (eg, zoning permissions or planning requirements)?
Before constructing any building or plants on the land allocated for the petroleum operations, the authorisation holder must obtain a building permit from the mayor of the locality where the operations are to be carried out. This requirement is set forth by Law 2004/004 on Urbanisation in Cameroon.
5 Processing, refining and export
5.1 What requirements and restrictions apply with regard to the processing and refining of oil and gas?
To process and refine oil and gas in Cameroon, the investor must obtain a licence from the Ministry of Water and Energy. The licence is valid for a maximum period of 25 years and is granted based on the applicant's technical and financial resources.
5.2 What requirements and restrictions apply to the export of oil and gas?
The exportation of oil and gas products is subject to a licence from the Ministry of Energy. It is granted for a maximum period of five years. There are no restrictions on the export of oil and gas products once a licence has been granted.
However, the state may requisition gas resources to satisfy national demands.
6 Transport and storage
6.1 What requirements and restrictions apply with regard to the transport and storage of oil and gas? Do these vary in the case of cross-border transportation?
Gas transportation activities are subject to a concession, which is valid only within the area for which it has been granted. Concession holders are selected through competitive bid; although in urgent circumstances, they may be granted directly without any bid.
Concessions are granted based on:
- the applicant's technical and financial resources;
- its adherence to local laws, including environmental protection laws; and
- the safety and security of the transportation networks.
The cross-border transportation of oil requires the authorisation of the state through which the oil will be transported. Moreover, the investor must obtain authorisation to export the oil or gas if it is intended for sale to consumers outside Cameroon.
6.2 What requirements and restrictions apply to the construction and operation of transport and storage infrastructure?
In accordance with Article 25 of the Petroleum Code, the import and installation of materials and equipment for the construction of gas transportation and distribution networks, gas storage centres and measuring and safety devices to be used by operators and customers are subject to authorisation by the minister of energy.
The authorisation is granted for a period of 03 years renewable.
7 Environmental issues
7.1 What environmental authorisations are required to undertake oil and gas activities in your jurisdiction? Do these vary depending on the type or location of the activity?
In accordance with Article 4 of Law 98/015 on Establishments which are Considered Dangerous, Unhealthy and Obnoxious, companies that carry out activities which are likely to endanger the environment must obtain authorisation from the Ministry of Environment before commencing activities.
Prior to carrying out petroleum operations, petroleum contract holders must also carry out an environmental impact assessment (EIA) of their operations. The EIA aims to evaluate the direct or indirect impact of petroleum operations on the ecological balance of the contract and the surrounding areas, and on people's living environment in general.
Moreover, in accordance with Decree 2012/2809/PM setting out conditions for the sorting, collection and transport or toxic or dangerous waste, petroleum operators must obtain an environmental permit before collecting, transporting or storing toxic or dangerous waste.
7.2 What environmental regulations or contractual obligations must the operator observe while oil and gas facilities are operational?
Petroleum contract holders must carry out petroleum operations in such a manner as to ensure, under all circumstances, the conservation of natural resources – in particular, hydrocarbon deposits – and due protection of essential features of the environment. In this regard, holders must take all necessary measures to:
- preserve the safety of persons and property; and
- protect the environment, natural surroundings and ecosystems.
In accordance with Article 61 of Decree 2000/465 Laying Down the Modalities for the Application of the Petroleum Code, petroleum operators must comply with the following statutory obligations:
- Take out an insurance policy covering damage to persons and property resulting from the petroleum operations;
- Carry out all acts necessary to minimise damage to the environment;
- Establish a rigorous system of prevention and control of pollution resulting from petroleum operations, as well as an accident prevention system and emergency plans to be adopted in the event of a disaster or threat of disaster presenting a danger to the environment and the safety of populations and property;
- Obtain the prior authorisations required by the laws and regulations in force and provide the required environmental impact studies;
- Ensure the treatment, elimination and control of emissions of toxic substances from petroleum operations that are likely to cause damage to people, property and the environment; and
- Install a collection system for waste and used equipment from the petroleum operations.
7.3 What environmental regulations or contractual obligations must the operator observe in relation to decommissioning?
In the event of decommissioning, petroleum operators must restore the land on which the petroleum operations were conducted to the state it was in before the operations commenced in accordance with best international practice.
The holders of an authorisation or a petroleum contract must repair any damage caused by the petroleum operations to the land. To this end, they will be liable to pay compensation commensurate with the damage caused, the amount of which will be determined by mutual agreement between the parties or, failing that, by the competent court.
7.4 What are the potential consequences of breach of these requirements – both for the operator itself and for directors, managers and employees?
Breach of the environmental regulations may attract administrative sanctions and may also trigger criminal liability. Administrative sanctions will result in withdrawal of the authorisation. Criminal liability may lead to the imposition of a fine on the perpetrator of the offence. Liability under Cameroon law is personal.
7.5 Which national, provincial/state and/or local government regulatory bodies are responsible for enforcement of environmental obligations?
The Ministry of Environmental Protection is the main institution that oversees the implementation of the petroleum laws in Cameroon. Among other things, it:
- classifies activities and establishments that are considered dangerous to the environment;
- lays down conditions for their implantation; and
- approves EIA reports submitted by parties that wish to conduct petroleum operations.
7.6 What is the regulators' general approach in regulating the oil and gas sector from an environmental perspective?
The regulators' approach is to ensure that operators in the oil and gas sector always act to protect the environment and the animals and persons that live in it. To this end, they should be guided by the following principles:
- The principle of precaution: A lack of certainty in the current scientific and technical knowledge should not prevent the adoption of effective and commensurate measures aimed at preventing the risk of serious and irreversible damage to the environment at an economically acceptable cost.
- The principle of preventive action and correction (through priority at the source): Threats to the environment should be prevented and corrected by using best available techniques at an economically acceptable cost.
- The polluter pays principle: Charges resulting from measures aimed at preventing, reducing and fighting against pollution and the rehabilitation of polluted areas should be borne by the polluter.
- The principle of liability: Any party that, through its actions, creates conditions that are likely to endanger human health or the environment must eliminate those conditions or cause them to be eliminated in such a way as to avoid their effects.
- The principle of participation:
- Every citizen should have access to information on the environment, including information on dangerous substances and activities.
- Each citizen should take action to safeguard the environment and contribute to its protection.
- Corporate bodies and private citizens should conform to these requirements in all their activities.
- Decisions on the environment should be taken after consultation with the relevant sectors of activity, or after a public debate where they are of a general nature.
8 Health and safety
8.1 What key health and safety requirements apply to oil and gas operators in your jurisdiction?
In accordance with Article 80 of the Petroleum Code, authorisation holders and their subcontractors must comply with the relevant hygiene and safety standards during the petroleum operations in accordance with the legislative and regulatory provisions in force and current international petroleum best practices.
Authorisation holders must comply with all measures they are instructed to take by the minister of mines, including the installation, at their own expense, of equipment required to prevent or eliminate dangers that the petroleum operations may cause to the safety of:
- the public;
- the environment; or
- conservation efforts.
Petroleum operators must also comply with Decision 039/MTPS/IMT, which sets out general measures for hygiene and security in the workplace.
In accordance with Article 2 of this decision, an employer is directly responsible for the application of all preventive health and safety measures aimed at protecting the workforce.
Petroleum operators that use manufacturing processes which involve special risks or are likely to cause occupational diseases must declare this before commencing operations through a registered letter addressed to the minister of labour and social welfare. The declaration must indicate:
- the nature of the risks; and
- the protective and preventive measures taken to protect workers from health hazards that may arise from such activities.
Petroleum operators must maintain premises, installations and tools which are appropriate for the work to be carried out, in order to provide workers with adequate protection against industrial accidents and any damage to health.
8.2 Which national, provincial/state and/or local regulatory bodies are responsible for enforcement of health and safety regulations or obligations? What reporting requirements apply with regard to oil and gas accidents in your jurisdiction?
The main institutions that oversee the enforcement of occupational health and safety measures are as follows:
- The Ministry of Employment ensures that all companies in Cameroon respect health and safety measures and standards in the workplace. To this end, it carries out periodic checks and ensures that companies comply with the health and safety measures prescribed by law.
- The Ministry of Mines oversees compliance with health and safety measures in the upstream sector and sanctions companies for non-compliance.
- The Ministry of Energy oversees health and safety measures in the downstream sector.
Authorisation holders must report any serious accident that takes place during the conduct of petroleum operations within 48 hours to the Ministry of Mines (for the upstream sector) and to the Ministry of Energy.
8.3 What are the potential consequences of breach of these requirements – both for the operator itself and for directors, managers and employees?
Failure to comply with the health and safety requirements could lead to the imposition of a fine or withdrawal of the petroleum authorisation.
8.4 What best practices in relation to health and safety should operators consider adopting in your jurisdiction?
Strict compliance with hygiene and safety measures as imposed by laws and regulations is essential in the petroleum sector. Where these rules and regulations fall short of current exigencies relating to safety and hygiene, the operator should address any shortfalls; and above all, it must take out relevant insurance policies which fully cover the various risks to which workers could be exposed.
8.5 What is the regulators' general approach in regulating the oil and gas sector from a health and safety perspective?
The regulators have adopted a very strict approach to ensure that operators in the oil and gas sector carry out petroleum operations in a safe and secure manner. Inspectors from the Ministry of Mines and the Ministry of Energy regularly carry out on-site visits to ensure that operators are compliant and sanction defaulting operators with fines. In extreme cases, they may order the closure of the establishment if its activities pose an imminent threat to health and safety.
9 Taxes and royalties
9.1 What national, provincial/state and/or local taxes, royalties and similar charges are levied on oil and gas operators in your jurisdiction? How are these calculated?
The following taxes apply to companies that carry out oil exploration and production:
- Annual surface rental fee:
- Exploration permit:
- First year: CFA 1,750 per square kilometre.
- Second year: CFA 2,000 per square kilometre.
- Third year: CFA 3,500 per square kilometre.
- Fourth year and each year thereafter: FCA 5,500 per square kilometre.
- Provisional exploration permit: FCA 100,000 per square kilometre.
- Exploitation concession: FCA 100,000 per square kilometre.
- Production royalty: The holders of concession contracts must pay a monthly royalty in proportion to production. The rate of this royalty and the rules governing its basis and the method for its collection – which may be different for liquid and gaseous hydrocarbons – are specified in the concession contract.
- Corporate tax: This applies to revenue derived from exploration and exploitation operations, and is fixed at 35%.
- Signature and production bonus: The holders of petroleum contracts must pay:
- a bonus – referred to as a ‘signature bonus' – to the state; and
- a bonus – referred to as a ‘production bonus' – to the state in proportion to the quantities of hydrocarbons produced in accordance with the terms and conditions specified in the petroleum contract.
- Additional petroleum or gas levy: The holders of concession contracts must pay an additional petroleum or gas levy calculated based on the profits derived from the petroleum operations. The terms and conditions of this levy will be specified in the petroleum contract
9.2 Are any tax incentives available for oil and gas operators?
Several tax exemptions and incentives will be of interest to investors in the Cameroon oil and gas sector.
Petroleum companies with the requisite technical and financial capacity, and with firm investment projects, can benefit from incentives upon application to the state. However, an application from a petroleum contract holder will be accepted only if:
- all of its contractual obligations towards the state have been fulfilled; and
- its activities comply with the provisions of the law.
Depending on the circumstances and provided that the activities are economically profitable, the incentives that the state may grant may include one or more of the following:
- a waiver from the signature bonus for petroleum contracts;
- an exemption from payment of corporate tax for a maximum period of five years for liquid hydrocarbons and seven years for gaseous hydrocarbons;
- adjustment of the economic parameters of the petroleum contract, including:
- a possible reduction of the state participation in exploitation;
- modification of the ‘profit oil' and/or ‘cost oil' for production sharing contracts; and
- a reduction in the rate of royalty in proportion to production for concession contracts;
- the possibility to recover from production, in any given exploitation area, the seismic acquisition and dry exploration expenses incurred in any other contractual area where the applicant conducts petroleum operations; and
- tax consolidation for exploration expenses.
9.3 What other strategies might oil and gas operators consider to mitigate their tax liabilities?
The tax regime applicable in the Cameroon oil and gas sector a is strict one. The only way to reduce a company's tax liability is to apply for the incentives discussed in question 9.2.
9.4 Have there been any significant changes to the taxation rates applicable to oil and gas operators in the last three years?
10.1 In which forums are oil and gas disputes typically heard in your jurisdiction?
In accordance with Article 125 of the Petroleum Code, the Cameroon courts have jurisdiction over any violations of:
- the provisions and implementing instruments of the code; and
- petroleum authorisations and contracts.
However, in practice, the parties to a petroleum contract always agree to resolve any disputes through arbitration.
10.2 What issues do such disputes typically involve? How are they typically resolved?
Disputes typically involve breach of clauses in the petroleum contract – for example:
- failure to meet the local content requirements; or
- failure to fulfil the minimum work programme.
10.3 Have there been any recent cases of note?
Not to our knowledge.
11 Trends and predictions
11.1 How would you describe the current oil and gas landscape and prevailing trends in your jurisdiction? Are any new developments anticipated in the next 12 months, including any proposed legislative reforms?
We do not anticipate any changes to the oil and gas legislation in Cameroon in the next 12 months.
Any changes to the Petroleum Code would be made through a bill tabled before the National Assembly. Since its enactment in 1999, the Petroleum Code has been amended only rarely.
12 Tips and traps
12.1 What are your top tips for oil and gas operators in your jurisdiction and what potential sticking points would you highlight?
The oil and gas sector in Cameroon is highly regulated. To conduct their activities without a hitch, operators should always endeavour to comply strictly with the legal and regulatory guidelines.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.