PETROLEUM INDUSTRY ACT, 2021

CENTER FOR LAWS OF NIGERIA: FEDERAL LAWS

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THE PETROLEUM INDUSTRY ACT, 2021

THE PETROLEUM INDUSTRY ACT, 2021

LAWS OF THE FEDERATION OF NIGERIA

ARRANGEMENT OF SECTIONS

CHAPTER 1 – GOVERNANCE AND INSTITUTIONS

Part I -Vesting, objectives and application

1.     Vesting of petroleum

2.     Objectives

Part II – Minister of Petroleum

3.     Powers of the Minister

Part III – The Commission

4.     Establishment of the Nigerian Upstream Regulatory Commission

5.     Application of this part

6.     The objectives of the Commission

7.     Technical regulatory functions of the Commission

8.     Commercial regulatory functions of the Commission

9.     Functions of the Commission for frontier basins

10.    Powers of the Commission

11.    Governing board of the Commission

12.    Functions of the board of the Commission

13.    Remuneration and allowances of the board of the Commission

14.    Suspension or removal of members of the board of the Commission

15.    Resignation of a Non-Executive Commissioner

16.    Vacancy on the Board of the Commission

17.    Filling of vacancy on the board of the Commission

18.    Commission Chief Executive and Executive Commissioners

19.    Employees of the Commission

20.    Terms and conditions of service in the Commission

21.    Remuneration and allowances of employees of the Commission

22.    Statement of estimated income and expenditure of the Commission

23.    Secretary to the Commission

24.    Fund of the Commission

25.    Notice to the Commission

26.    Special Powers of the Commission

27.    Special Investigation Unit

28.    Indemnity of officers of the Commission

Part IV – The Authority

29.    Establishment of the Nigerian Midstream and Downstream Petroleum Regulatory Authority

30.    Application of this part

31.    The objectives of the Authority

32.    Functions of the Authority

33.    Regulations by the Authority

34.    Governing board of the Authority

35.    Functions of the board of the Authority

36.    Remuneration and allowances of members of the board of the Authority

37.    Suspension or removal of a member of the board of the Authority

38.    Resignation of a Non-Executive Member of the board of the Authority

39.    Vacancy on the board of the Authority

40.    Filling of vacancy on the board of the Authority

41.    Authority Chief Executive and Executive Directors of the Authority

42.    Employees of the Authority

43.    Terms and conditions of service in the Authority

44.    Remuneration and allowances of employees of the Authority

45.    Statement of estimated income and expenditure of the Authority

46.    Secretary to the Authority

47.    Fund of the Authority

48.    Notice to the Authority

49.    Special powers of the Authority

50.    Special Investigation Unit

51.    Indemnity of officers of the Authority

52.    The midstream gas infrastructure fund

Part V – The Nigerian National Petroleum Company Limited

53.    The Nigerian National Petroleum Company limited

54.    Transfer of assets and liabilities

55.    Appointment of NNPC limited as agent of NNPC

56.    Subsistence of guarantee

57.    Transfer of employees and conditions of service

58.    The board of NNPC limited

59.    Composition of the board of NNPC limited

60.    Committees of the board of NNPC limited

61.    Application of principle of corporate governance

62.    Annual audit of NNPC limited

63.    Responsibilities of the board of NNPC limited

64.    The objects of NNPC limited

65.    Establishment of incorporated joint venture companies

CHAPTER TWO

ADMINISTRATION

Part I – General Administration

66.    Objectives

67.    Management of petroleum resources

Part II – Administration of Upstream Petroleum Operations

68.    Administration of acreage and vesting of data

69.    National grid system

70.    Licences and leases

71.    Petroleum exploration licence

72.    Petroleum prospecting licence

73.    Bidding process

74.    Award process

75.    Licensing round guidelines

76.    Model licence and model lease

77.    Duration and area of petroleum prospecting licence

78.    Work commitment, commercial discovery and significant gas discovery

79.    Commercial discovery and field development plan

80.    Unitisation

81.    Petroleum mining leases

82.    Exclusive right to conduct operations

83.    Confidentiality

84.    Power to enter into contracts

85.    Model contracts

86.    Duration and renewal of leases and licences

87.    Conditions for renewal of petroleum mining leases

88.    Relinquishment

89.    Surrender of licence or lease

90.    Rights of way relating to upstream petroleum operations

91.    Rights of way reserved for the Commission

92.    Voluntary conversion of an oil prospecting licence to a petroleum prospecting licence or oil mining lease to    petroleum mining lease

93.    Relinquishment upon renewal or conversion of an oil mining lease

94.    Marginal field

95.    Assignments, mergers, transfers and acquisitions

96.    Grounds for revocation of licence or lease

97.    Notice of default prior to revocation

98.    Administration of a revoked producing lease

99.    Power of revocation of participating or shareholders interest

100. Fees

101. Damage to protected and venerated objects

102. Environmental management

103. Financial contribution for remediation of environmental damage

104. Gas flaring penalties

105. Prohibition of flaring or venting of natural gas

106. Measurement of flared natural gas

107. Exemption

108. Natural gas flare elimination plan

109. Domestic crude oil supply obligations

110. Domestic gas delivery obligations

Part III – General Administration of Midstream and Downstream Petroleum Operations

111. Matters relating to licence applications

112. Advertisement of licence applications

113. Licensing regulations

114. Conditions in licences or permits

115. Compensation for acquisition of land

116. General non-discrimination

117. Assignment or transfer of licence or permit

118. Suspension and amendment of conditions in a licence or permit

119. Surrender of licence or permit

120. Grounds for the revocation of a licence or permit

121. Notice of default prior to revocation

122. Tariff principles

123. Tariff methodology

124. Approval and publication of charging structures

Part IV – Administration of Midstream and Downstream Gas Operations

125. Activities requiring a licence midstream and downstream gas operations

126. Special regulations for midstream and downstream gas operations

127. Rights of way in relation to midstream and downstream gas operations

128. Surface rights reserved for the Authority relating to midstream and downstream gas operation

129. Grant of a gas processing licence

130. General duties of the holder of a gas processing licence

131. Conditions applicable to a gas processing licence

132. Grant of a bulk gas storage licence

133. General duties of a bulk gas storage licensee

134. Conditions applicable to a bulk gas storage licence

135. Grant of gas transportation pipeline licence

136. General duties of a transportation pipeline owner

137. Conditions applicable to a gas transportation pipeline licence

138. Grant of gas transportation network operator licence

139. General duties of a gas transportation network operator

140. Powers of a gas transportation network operator

141. Conditions applicable to a gas transportation network operator licence

142. Grant of a wholesale gas supply licence

143. General duties of a wholesale gas supplier

144. Rights of a wholesale gas supplier

145. Conditions applicable to a wholesale gas supply licence

146. Grant of a retail gas supply licence

147. General duties of a gas retailer

148. Grant of gas distribution licence

149. General duties of a gas distributor

150. Rights of the gas distributor

151. Conditions applicable to a gas distribution licence

152. Arrangements for gas distribution

153. Domestic gas aggregation licence

154. Functions of the domestic gas aggregator

155. Establishment of the aggregator

156. Gas purchase orders

157. Price conditions of gas purchase orders

158. Wholesale customers

159. Trading and settlement of wholesale gas

160. Gas network code

161. Third party access relating to midstream and downstream gas operations

162. Conditions for the provision of open access in relation to gas operations

163. Disputes in respect of third party access

164. Customer protection

165. Provision of service to customers

166. Transfer of customers

167. Natural gas prices for the strategic sector, gas distributors and retailers

168. Gas based industries gas price

169. Power to regulate and review prices

170. Pricing principles in relation to gas

171. Public service obligations related to policy issues

172. Public service levy

173. Domestic Gas Demand Requirement

Part V – Administration of Midstream and Downstream Petroleum Liquids Operations

174. Activities requiring a licence for midstream and downstream petroleum liquids operations

175. Special regulations for midstream and downstream petroleum liquids operations

176. Rights of way relating to midstream and downstream petroleum liquids operations

177. Surface rights reserved for the authority for midstream and downstream petroleum liquids operations

178. Petroleum liquids midstream network code

179. Third party access relating to midstream and downstream petroleum liquids operations

180. Conditions for the provision of open access in relation to petroleum liquids operations

181. National strategic stocks

182. Operating stock

183. Grant of a crude oil refining licence

184. General duties of a crude oil refiner

185. Access rights

186. Conditions applicable to a crude oil refining licence

187. Grant of a bulk petroleum liquids storage licence

188. General duties of a bulk storage licensee

189. Conditions applicable to a bulk petroleum liquids storage licence

190. Grant of petroleum liquids transportation pipeline licence

191. General duties of a petroleum liquids transportation pipeline owner

192. Conditions applicable to a petroleum liquids transportation pipeline licence

193. Grant of transportation network operator licence

194. General duties of a petroleum liquids transportation network operator

195. Powers of a petroleum liquids transportation network operator

196. Conditions applicable to a petroleum liquids transportation network operator licence

197. Grant of a wholesale petroleum liquids supply licence

198. General duties of a wholesale petroleum liquids supplier

199. Rights of a wholesale petroleum liquids supplier

200. Conditions applicable to a wholesale petroleum liquids supply licence

201. Grant of licence for distribution of petroleum products

202. General duties of petroleum product distributor

203. Grant of a licence to construct and operate a facility for retail supply and distribution of petroleum products

204. Grant of a permit to construct and operate a facility for the production of petrochemicals

205. Pricing regime and power to regulate tariffs

206. Wholesale prices for petroleum products

207. Pricing principles in relation to petroleum products

208. Publication of prices

Part VI  Other Matters Related to Midstream and Downstream Operations

209. Public service obligations

210. Competition and Market Regulation

211. Power to prevent anti-competitive behaviour

212. Separation of certain licenced activities

213. Non-discrimination among customers

214. Considerations for exercise of the Authority’s powers

215. Power to serve notice, issue “cease and desist” order, etc.

Part VII – Common Provisions for Upstream, Midstream and Downstream Petroleum Operations

216. Consultation for regulations

217. Contravention and enforcement of conditions of leases, licences or permits

218. Mandatory registration

219. Register of licences, permits and authorisations

220. Preparation of licences, permits and authorisations

221. Effective date and authentication of licences, permits and authorisations

222. Register of memorials

223. Register of interests

224. Effect of registration

225. Public access to the registry

226. Default approvals

227. Disclosure of confidential or other information

228. Offences

229. Penalties

230. Refusal to furnish, return or supply information

231. Power to issue administrative penalties

232. Abandonment, decommissioning and disposal

233. Decommissioning and abandonment fund

CHAPTER THREE

Host Communities Development

234. Objectives and regulations

235. Incorporation of host communities development trusts

236. Timeframe for incorporation of host communities development trust

237. Transfer of settlor’s interest and obligations subject to host communities development trust obligation

238. Failure to incorporate host communities development trust

239. Objectives of host communities development trust

240. Sources of funding for petroleum host communities development trust

241. Matters on which the funds may be utilised

242. The Board of trustees, composition, management, etc.

243. Duties and functions of the Board of Trustees

244. Allocation of funds

245. Matrix for distribution of trust fund

246. Engagement of fund managers

247. Management committee, composition, powers, etc.

248. Duties and functions of the management committee

249. Host community advisory committee, composition, etc

250. Duties and functions of the host community advisory committee

251. Host community needs assessment

252. Contents of host community development plans

253. Financial year of the host communities development trust

254. Accounts and audit

255. Mid-year and annual reports

256. Exemption from income tax

257. Deduction of payment for petroleum host community development

CHAPTER FOUR – Petroleum Industry Fiscal Framework

Part I – Objectives and Administration

258. Objectives

259. Administration

Part II – Hydrocarbon Tax

260. Application of this Part

261. Charge of hydrocarbon tax

262. Ascertainment of crude oil revenue, adjusted profit, assessable profits and chargeable profits

263. Allowable deductions

264. Deductions not allowed

265. Assessable Profits and Losses

266. Chargeable profits and allowances

Part III – Ascertainment of Chargeable Tax

267. Chargeable Tax

268. Additional Chargeable Tax payable in certain circumstances

Part IV – Ascertainment of Total Profits and Consolidation for Tax Purposes

269. Artificial transactions, etc.

270. Assessable Profits and adjusted Losses

271. Trade or business sold or transferred

272. Consolidation of costs and taxes

Part V – Persons Chargeable

273. Partnerships, etc.

274. Company wound up, etc.

275. Avoidance by transfer

276. Indemnification of representative

Part VI – Applicability, Accounts and particulars

277. Preparation and delivery of accounts and particulars

278. Power of the Service to request further information

279. Power to call for returns, books, etc.

280. Returns of estimated tax

281. Extension of periods for making returns

282. Assessment of Tax Payable

283. Additional assessments

284. Making of assessments, etc.

285. Notices of assessment, etc

286. Errors and defects in assessment and notice

287. Tax computation

Part VII – Appeals

288. Appeals to Tax Appeal Tribunal

289. Assessment to be final and conclusive

Part VIII – Collection, Recovery and Repayment of Tax

290. Procedure in cases where objection or appeal is pending

291. Time within which payment is to be made

292. Penalty for non-payment of tax and enforcement of payment

293. Collection of tax after determination of objection or appeal

294. Suit for tax by the Service

295. Relief in respect of error or mistake

296. Repayment of tax

Part IX – Offences and Penalties

297. Penalty for defaults

298. Penalty for making incorrect accounts, etc

299. False statements and returns

300. Penalties for offences by authorised and unauthorised Persons

301. Tax to be payable notwithstanding any proceedings for penalties

Part X – Application of Companies Income Tax to Petroleum Operations

302. General requirement of companies engaged in petroleum operations to paycompanies income tax

Part XI – General Provisions

303. General Application of this Part and other matters

304. Regulations, rules and forms

305. Fiscal stabilization

306. Royalty

CHAPTER FIVE – Miscellaneous Provisions

307. Legal proceedings, etc.

308. Pre-Action Notice

309. Consequential Amendments

310. Repeals

311. Saving provisions

312. Transfer of assets and liability to the Commission

313. Transfer of assets and liability to the Authority

314. Transfer of employees and conditions of service

315. Movement of staff of the institutions

316. Transfer of Existing Host Community Development Projects and Host Community Development Schemes

317. Transitional and Savings Provisions related to Chapter Four

318. Interpretation

319. Short title

Schedules

AN ACT TO PROVIDE LEGAL, GOVERNANCE, REGULATORY AND FISCAL FRAMEWORK FOR THE NIGERIAN PETROLEUM INDUSTRY, THE DEVELOPMENT OF HOST COMMUNITIES AND FOR RELATED MATTERS ENACTED BY

COMMENCEMENT                                         [16TH AUGUST, 2021]

[The Senate and House of Representatives passed the bill on July 15, 2021, and July 16, 2021] respectively]

THE National Assembly of the Federal Republic of Nigeria as follows

CHAPTER 1 – GOVERNANCE AND INSTITUTIONS

Part I – VESTING AND OBJECTIVES

1.     Vesting of petroleum

The property and ownership of petroleum within Nigeria and its territorial waters, continental shelf and Exclusive Economic Zone is vested in the Government of the Federation of Nigeria.

2.     Objectives

The objectives of this Chapter are to –

(a)    create efficient and effective governing institutions, with clear and separate roles for the petroleum         industry;

(b)    establish a framework for the creation of a commercially oriented and profit driven national petroleum     company;

(c)    promote transparency, good governance and accountability in the administration of the petroleum resources of Nigeria; and

(d)    foster a business environment conducive for petroleum operations.

Part II – MINISTER OF PETROLEUM

3.     Powers of the Minister

(1)    The Minister shall –

        (a)    formulate, monitor and administer government policy in the petroleum industry;

        (b)    exercise general supervision over the affairs and operations of the petroleum industry in accordance with the provisions of this Act;

        (c)    report developments in the petroleum industry to the government;

        (d)    represent Nigeria at international organisations on petroleum matters;

        (e)    promote an enabling environment for investment in the Nigerian petroleum industry;

        (f)     negotiate treaties or other international agreements on matters pertaining to petroleum on behalf of the Government;

        (g)    upon the recommendation of the Commission, grant Petroleum Prospecting Licences and Petroleum Mining Leases through the processes established in this Act;

        (h)    upon the recommendation of the Commission and pursuant to the provisions of this Act and the Regulations, revoke and assign interests in Petroleum Prospecting Licences and Petroleum Mining                     Leases;

        (i)     delegate in writing to the Chief Executive of the Commission or Authority any power conferred on the Minister by or under this Act;

        (j)     upon the recommendation of the Commission or Authority approve the fees for services rendered by the Commission or Authority in Regulations;

        (k)    upon the recommendation of the Commission or the Authority, direct in writing the suspension of petroleum operations in any area –

                (i)     until arrangements to prevent danger to life or property have been made to his satisfaction, or

                (ii)    where in his opinion, a contravention of this Act or any Regulation made under this Act has occurred or is likely to occur.

(2)    The Minister may order a cutback of the levels of crude oil or condensate production in the context of international oil pricing agreements supported by Nigeria.

(3)    The Minister shall have rights of pre-emption of petroleum and petroleum products marketed under any    licence or lease in the event of a national emergency under the First Schedule to this Act.

(4)    The Minister may give general policy directives to the commission on matters concerning upstream   petroleum operations and to the authority on matters relating to midstream and downstream petroleum   operations in line with the provisions of this Act and the Commission and the Authority shall comply with    such directives.

(5)    The Minister shall cause the general policy directives issued pursuant to subsection

(4)    of this section to be published in the Gazette.

………………………………………………………………..

310. Repeals

(1)    From the effective date of this Act the following enactments and Regulations are repealed –

(a)    Associated Gas Reinjection Act, 1979 CAP A25 Laws of the Federation 2004, and its Amendments;

(b)    Hydrocarbon Oil Refineries Act No. 17 of 1965, CAP H5 Laws of the Federation of Nigeria 2004;

(c)    Motor Spirits (Returns) Act, CAP M20 Laws of the Federation of Nigeria 2004;

(d)    Nigerian National Petroleum Corporation (Projects) Act No. 94 of 1993, CAP N124 Laws of the Federation of Nigeria 2004;

(e)    Nigerian National Petroleum Corporation Act (NNPC) 1977 No, 33 CAP N123 Laws of the Federation of Nigeria as amended, when NNPC ceases to exist pursuant to section 54(3) of this Act;

(f)     Petroleum Products Pricing Regulatory Agency (Establishment) Act 2003;

(g)    Petroleum Equalisation Fund (Management Board etc.) Act No. 9 of 1975, CAP P11 Laws of the Federation of Nigeria 2004;

(h)    Petroleum Equalisation Fund (Management Board, etc.) Act, 1975;

(i)     Petroleum Profit Tax Act Cap P13 LFN 2004, and

(j)     Deep Offshore and Inland Basin Production Sharing Contract Act 2019, as amended.

(2)    The provisions of the Pre-Shipment Inspection of Oil Export Act, 1996 shall be amended accordingly.

(3)    With respect to the Petroleum Equalisation Fund, as of the Effective Date –

        (a)    the collection of net surplus revenues from oil marketing companies shall cease, except for the collection of unpaid net surplus revenues earned prior to the effective date; and

        (b)    the payment for reimbursements to oil marketing companies shall cease, except for possible remaining payment obligations incurred prior to the effective date.

(4)    An amount remaining in the Fund after the completion of the transactions under paragraphs (a) and (b) of this subsection shall be transferred to the Midstream Gas Infrastructure Fund; and

(5)    Where the Fund is insufficient to make the payments pursuant to paragraph (b) of this subsection the Authority may prorate the amounts payable based on the ratio between the Funds remaining and the     outstanding payables, provided that where the Fund is in a deficit, the proration shall be zero, and oil marketing companies shall have no claim as to further outstanding amounts.

2016 ACTS ENACTED BY NATIONAL ASSEMBLY

1. Advertising Practitioners Registration Amendment Act, 2016
2. Agricultural and Rural Management ‎Training Institute Amendment Act‎2016
3. Bee Import Control and Management Amendment Act‎2016
4. Chartered Institute of Stock Brokers Amendment Act, 2016
5. Endangered Species (Control of International Trade and Traffic) Amendment Act 2016
6. Mortgage Institutions (Amendment) Act, 2016
7. National Agricultural Land Development Authority Amendment Act‎2016
8. National Crop Varieties and Livestock Breeds (Registration) Amendment Act‎, 2016
9. National Judicial Institute Amendment Act, 2016
10. Prevention of Crime Amendment Act,‎2016
11. Produce Enforcement of Export Standards Amendment Act‎2016
12. Quality Surveyors Registration Amendment Act, 2016
13. Small and Medium Scale Industries Development Agency Amendment Act, 2016.
14. Telecommunications and Postal Offences Amendment Act,‎2016
15. Treaty to Establish African Economic Community Relating to Pan African Parliament (Accession and Jurisdiction) Amendment Act, 2016
16. University of Abuja Amendment Act, 2016
17. Utilities Charges Commission Amendment Act, 2016
18. Water Resources Amendment

LAWS OF THE FEDERAL REPUBLIC OF NIGERIA

ALPHABETICAL INDEX TO THE LAWS OF NIGERIA (UPDATED TO 2018)

LAWS MADE BY THE NATIONAL ASSEMBLY OF NIGERIA [1999 – 2019]

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