Adopted a Petroleum Code
15 Nov 2019
On 15 November 2019, Benin adopted a "Petroleum Code" (Law No 2019-06). The law determines the legal, tax, customs and exchange regime for petroleum activities in the country. It sets the framework for petroleum activities in Benin, including exploration, development, production, transportation, storage and marketing of hydrocarbons. The key changes introduced by this law include:
• It establishes a production sharing contract (PSC) regime for upstream petroleum activities, with a model PSC form to be issued by a separate decree.
• Research authorizations are granted for an initial period of 4 years onshore and 6 years offshore, with the possibility of two renewals of 3 and 2 years respectively.
• Profit sharing between companies and the Government will be set in the PSC, with cost recovery capped at 70-80% of production depending on the field location.
• The Government will receive an "ad valorem royalty" and a share of "profit oil" (after cost recovery), with minimum tax oil rates of 40-45%.
• Companies must submit a local content plan with production authorization applications, and the Government can acquire up to a 20% participating interest, with up to 10% carried by the company.
• The law applies only to upstream petroleum activities, and does not cover storage, transportation or midstream/downstream gas activities.
The adoption of this new Petroleum Code is part of Benin's broader efforts to improve its business climate and attract investment in the oil and gas sector.
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Type:
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Entry and establishment (Ownership and control)
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Industry:
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Primary (Mining and quarrying)
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