Technical Affairs

Regulations for the Conservation of Petroliam Resources

The Purpose Of The Regulations For The Conservation Of Petroleum Resources ( Hereinafter Referred As The Regulation ) Is To Implement Law No. 19 Of The Year 1973 Concerning The Conservation Of Petroleum Resources ( Hereinafter Referred To As The Law ).

The Law Has Been Promulgated By The State Of Kuwait To Assure Maximum Ultimate Recovery Of Its Hydrocarbon Resources To Prevent Waste Or Pollution To Achieve Safe And Efficient Practices And To Acquire Useful Information Regarding Petroleum Operations .

The Regulations are set out For General Application Within The State Of Kuwait And Those Land And Offshore Areas Under The Jurisdicition And Administration Of The State Of Kuwait. The Regulations Shall Apply To Every Well Drilled Within The State Of Kuwait And To Any Product Obtained Or Obtainable Therefrom; To Every Production Or Injection Operation; To Every Petroeum Processing And Refining Operations And The Productions Derived Therefrom; And To The Transportation And Marketing Of Crude Oil, Natural Gas, And Products Derived Thereform .

These Regulations Shall Be Implemented By The Technical Affairs ( TA ) Of The Ministry Of Oil Of The State Of Kuwait .

Annex 1

Law No. 19 Of The Year 1973 Concerning The Conservation Of Petroleum Resources *

We, Sabah Al Salem Al Sabah, Amir Of Kuwait, Having Noted Articles 21, 65 And 152 Of The Constitution, The National Assembly Has Passed The Following Law And We Have Sanctioned And Promulgated It:

Article 1:

In The Implementation Of The Provisions Of This Law, The Term "Petroleum" Shall Mean All Natural Hydrocarbons Whether In Solid, Liquid Or Gaseous State Which Are Or Can Be Produced From The Surface Of The Ground Or From Underground And All Hydrocarbons Or Other Kinds Of Fuels Derived Therefrom.

The Term "Petroleum Operation" Or "Petroleum Operations" Shall Mean Reconnaisance And Exploration For Petroleum ;The Development Of Fields, The Drilling Of Wells; The Production Of Petroleum ,Its Treatment, Refining, Processing, Storing, Transporting, Loading And Shipping; Constructing, Installing And Operating Facilities For Water, Power, Housing And Camps Or Any Other Facilities Or Installations Or Equipment Necessary For Accomplishing The Aforementioned Purposes, And All Administrative Activities Relating Thereto.

The Term "Authorized Operator" Shall Mean Any Person Either An Individual Or A Corporate Body Legally Authorized To Carry Out Any Petroleum Operation.

Article 2:

All Petroleum Operations Shall Be Subject To the Provisions Of This Law And Its Implementing Regulations.

Petroleum Operations Must Be Carried Out In The Best Manner Using Efficient And Reasonable Methods And Good Techniques As Would Be Expected From A Person Fully Experienced In Such Operations Under Similar Circumstances And Conditions .

Article 3:

Authorized Operators Shall Take All Measures And Precautions Necessary To Prevent Any Damage Or Danger Which Might Result From Petroleum To Human Life, Public Health, Properties, Natural Resources, Cemeteries Or Archaeological, Religious And Tourist Sites. They Must Also Take All Necessary Precautions To Prevent Pollution Of Air And Surface And Underground Waters.

Article 4:

All Machinery, Equipment And Materials Used In Petroleum Operations Must Conform To Recognised Internationally Acceptable Specifications Meet Safety Requirements And Serve Its Purpose In Accordance With The Best Techniques In Practice.

Article 5:

Authorized Operators Shall Submit Periodically To The Minister Of Finance And Oil The Programmes, Reports, Statements And Information Relating To Their Petroleum Operations. Officials Designated By The Minister Of Finance And Oil Shall Have The Right To Inspect The Offices Of An Authorized Operator And The Sites Of His Operations And To Examine His Documents And Records To Ascertain That The Reports Statements And Information Submitted Under The Preceding Paragraph Are In Conformity With The Facts .

Article 6:

Before Starting To Carry Out Any Project Relating to Petroleum Operations, an Authorized Operator Shall Submit To The Minister Of Finance And Oil A Description Of The Project, Including The Plans Relating Thereto Its Location, Capacity, Estimated Costs, The Operating Methods To be Used, Engineering Data And Any Other Information. The Minister Shall Have The Right To Approve The Project, Reject It, Or Request That It Be Further Studied, Clarified Or Modified .

In The Event Of Approval Of The Project, The Authorized Operator Must Notify The Minister Of The Completion Of Each Of Its Stages So As To Enable The Minister To Ascertain That Each Stage Has Been Carried Out In Accordance With The Description And Plans On The Basis Of Which The Project Was Approved .

Article 7:

The Regulations Necessary For Implementing This Law Shall Be Issued By The Minister Of Finance And Oil . These Regulations Shall Cover All Aspects of Petroleum Operations With A View To Ensuring The Exploitation Of Petroleum Resources In Accordance With Sound Practices And Efficient Methods, The Prevention Of Loss Or Waste Of Such Resources And The Maximum Possible Yield Therefrom . These Regulations Shall Also Include The Necessary Measures For Regulating The Production Of Petroleum, Provisions For Safety Precautions, And Cover Statements, Information And Documents Which The Authorized Operator is requird To Submit And The Procedures To Be Adopted In This Respect And The Methods And Procedures For Carrying Out All Petroleum Operations Including The Following :

  • All activities relating to reconnaisance and exploration operations.
  • All activities relating to drilling operations, including permission to Drill, well spacing and location, equipping of well, electrical logging, coring and testing, plugging, use, abandonment or suspension of wells, and completion and re-completion of wells.
  • All activities relating to production operations including well performance testing and in-hole surveys, workover and maintenance of wells, reservoir behavior studies, enhanced recovery projects, underground storage of petroleum, separation of gas from oil, utilization of gas, disposal of salt water and reservoir unitization .In relation to the carrying out of these activities, the Minister of Finance And Oil May Notify An Authorized Operator Of The Actions To Be Taken And Specify For Him A Time Limit For Taking Them. If The Authorized Operator Does Not Comply With Such Notice Or If He Has complied but has Failed To Achieve The Required Effect The Minister Of Finance And Oil May Issue An Order To Shut In Production From One Well, Several Wells, Or From The Reservoir.
  • All activities relating to treatment of petroleum, its refining, processing, storing, transporting, loading and shipping, which activities include measurements, Calibration and laboratory analyses and their evaluation.
  • All activities relating to installations, Facilities and equipment for all petroleum operations.

These regulations shall also cover the measures necessary for the implementation of article 3 of this law.

Article 8:

An Authorized Operator shall render, free of charge, to the officials of the Ministry of Finance and Oil who are designated by the Minister of Finance and Oil to implement the provisions of this law, all necessary services including furnished offices, Suitable living accommodation, means of transportation, Necessary facilities to conduct laboratory tests and any other necessary services.

Article 9:

The Minister of Finance and Oil may, in certain special cases, entrust any person, individual or corporate, with the exercise of all or some of the powers vested in him under the provisions of this law and its implementing regulations. Whoever is so entrusted shall have the same rights and privileges as are granted to the officials of the Ministry of Finance and Oil designated by the Minister to implement the provisions of the law and its regulations.

Article 10:

An administrative penalty of not less than ten thousand dinars shall be impost for a contravention of the provisions of this law or its implementing regulations. In the event of a similar contravention being committed within three years from the date of the previous contravention, the administrative penalty shall be doubled. Appropriate compensation shall be imposed in addition to the aforementioned penalty in all cases in which the contravention results in damage to petroleum resources. The imposition of an administrative penalty or compensation shall have no effect on any other sanctions or penalties mentioned in any other laws or regulations or provided for in contractual or international agreements.

Article 11:

An administrative penalty and compensation shall be imposed by a reasoned Decision of the Minister of Finance and Oil on the basis of a report by the competent administrative authority. The Decision shall contain:

  • A description of the contravention.
  • The provision that is contravened.
  • The person responsible for the contravention.
  • The amount of the administrative penalty and compensation if any.

The Authorized operator shall be notified of the Decision within one week of the issue thereof by a letter by registered post with acknowledgement.

The Authorized Operator may appeal against this Decision within twenty-one days from the date on which he is notified thereof and the appeal shall be made by a written submission to the High Court of Appeal. The Decision shall become enforceable if it is not appealed against, or if it is appealed against and it is confirmed, or if the Minister issues a decision for the temporary enforcement thereof pending a decision on the appeal. In the cases referred to in the preceding paragraph the Decision shall have the authority of a court writ and shall be enforced by the same procedures followed in the enforcement of court judgements.

Article 12:

The Ministers, each within his jurisdiction, shall implement this law, which shall come into effect on the date of its publication in the official gazette.

Sabah Al Salem Al Sabah Amir of Kuwait

Promulgated at self palace on 24th Jamad Awal, 1393 A.H. Corresponding To : 25th June, 1973 A.D.

Annex II

Explanatory Memorandum for Law No. 19 Of The Year 1973 Regarding Conservation Of Petroleum Resources*

Whereas The State Has The Right To Take Whatever Measures Are Necessary And Proper To Ensure Conservation Of Its Natural Resources And Their Sound Economic Exploitation And Whereas This Right Is Inherent In The State Whether Or Not Involved In Contractual Relations With Companies Enlarged In Exploiting These Resources.

And Whereas Petroleum Is The Main Source Of Kuwait's Wealth And Its Conservations Is Considered To Be Necessary For The Preservation Of Its Economic Structure And Future.

And Whereas These Matters Require The Surveillance By The State Of The Operations Relating To The Petroleum Industry To Ensure The Proper Conduct And Effectiveness.

The Ministry Believes This Law To Be Necessary, Considering What The Organization Of Petroleum Exporting Countries Previously Adopted In Its Sixteenth Conference In June, 1968 Regarding " Declatory Statement Of Petroleum Policy In Member Countries " And Considering The " Pro-Forma Regulations " Prepared By That Organization And Approved Then By Kuwait, An Similar Legislation promulgated In Other Countries.

The Draft Of This Law Includes A Statement Of Basic Subjects And Rules For The Conservation Of Petroleum Resources But Leaves Out The Details For The Decisions And Regulations Which Will Be Issued To Implement It.

Article 1:

Covers Some Definitions Of Terms Mentioned In The Law.

Article 2:

Stipulates That An Authorized Operator Shall Carry Out Any Operations In Accordance With The Provisions Of This Law And The Regulations Issued For Its Implementation, By Using Best Effective Methods Practised In The Petroleum Industry.

Article 3:

Stipulates That The Authorized Operator Shall Protect Human Health An Public Properties From Pollution Of Air, Surface And Subsurface Waters.

Article 5:

Gives The Minister Of Finance And Oilthe Right To Inspect The Operations Carried Out By The Operator And Obliges the Operator To Submit To The Minister Reports On His Operations.

Article 6:

Obliges The Operator To Submit A full Description Of Any Project Before Implementing It And Has Granted The Minister Of Finance And Oil The Right To Approve, Reject Or Request Modification Of The Project. If The Minister Approves It, The Operator Shall Notify Him Upon Completion Of Implementation Of Each Of Its Stages In Order To Ensure Proper Follow-Up Of The Implementation.

Article 7:

Gives The Minister Of Finance And Oil The Right To Issue The Necessary Regulations For Conducting All Petroleum Operations. These Regulations Shall Include Among Other Things, Data, Information And Documents Systems Which The Operator Shall Submit. The Article States The Basic Subjects Dealt With By These Regulations. The Article Sets Out In Relation To Production Activities (Paragraph C), The Minister's Rights To Shut Down Production From A Well Or Several Wells Or Even The Whole Reservoir As A Protective Action To Take Care Of All Probabilities Including Certain Circumstances Where The Operator's Compliance With Measures Stipulated In The Regulations Or The Minister'S Instructions, Fail To Achieve The Required Result For The Conservation Of Petroleum Resources. In Order To Give Effectiveness To The Law, It Was Decided That It Should Contain Deterrent Penalties. So Article 10 Stipulates The Administrative Penalties That Can Be Imposed Upon The Operator If He Commits A Contravention Or Upon Repeating The Contravention. The Article Has Also Provided For Compensation In Case Of Damage To The Resources Article 11 Has Granted The Minister Of Finance And Oil the right to Impose Administrative Fines And Compensation, However, It Has Given The Operator The Right To Appeal Against The Minister's Decision Before The High Court Of Appeal.

Minister of Finance and Oil