The Petroleum Industry Bill 20122 (Part four)

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creditors which has not been rescinded or set aside;

(iii)  been declared to be of unsound mind;70

(iv)  been convicted of an offence involving fraud or dishonesty;or

(v)  been disqualified by a competent authority from carrying out any

assignment, responsibility or function in his professional capacity

in any part of the world.

135.  Removal of a member of the Board

(1)  A member of the Board may be suspended or removed from  office by the

President if the member –

(a)  is found to have been unqualified for appointment as a member of the

Board after his appointment;

(b)  has demonstrated inability to effectively perform the duties of his

office;

(c)  has been absent from five consecutive meetings of the Board without

the consent of the Chairman except for good cause shown for such

absence;

(d)  commits an act of serious misconduct;

(e)  in the case of a person possessed of professional qualifications, he is

disqualified or suspended from practicing his profession in any part of

the world by an order of a competent authority; or

(f)  is in a breach of the conflict of interest rules set out in the  Second

Schedule to this Act.

136.  Resignation of a member of the Board

A member of the Board may resign his office by giving three  months written notice
addressed to the President through the  Minister.

137.  Vacancy on the Board

(1)  A vacancy on the Board shall occur if a member of the Board—

(a)  dies;

(b)  is removed from office in accordance with section 159 of this Act; or

(c)  resigns from office; or

(d)  completes his tenure of office. 71

(2)  A vacancy on the Board shall be filled by the appointment of  another person

to the vacant office by the President in accordance with the provision of

section 131 of this Act, as soon as is reasonably practicable after the

occurrence of such vacancy.

138. Administrative support by Management Company

The Management Company, to be established as a subsidiary of the Corporation,

shall provide full administrative support for the work of the Board of the Corporation.

139.  Power to accept gifts

 

(1)  The Corporation may accept gifts of money or other property upon such terms

and conditions as may be specified by the person or organisation making the

gift provided such gifts are not inconsistent with the objectives and functions

of the Corporation under this Act.

(2)  Nothing in subsection (1) of this section or in this Act shall be construed to

allow any member of the Board or staff of the Corporation to accept gifts for

their personal use.

140. Accounts and audit

The Corporation shall keep proper accounts of its income and expenditure in respect

of each financial year and shall cause its accounts to be audited within six months

after the end of each year in accordance with International Financial Reporting

Standards consistent with guidelines supplied and auditors approved by the AuditorGeneral of the Federation. .

141.  Mid-year and annual reports

(1)  The Corporation shall submit to the Minister, a mid-year report of its

operations and finances not later than 31st August of each year and an annual

report of its operations, performance and audited financial report of the

preceding year not later than 31st May of the following year.

(2)  A summary of the annual report and audited financial report of the Corporation

shall be published on the website of the Corporation for public notice not later

than 31st of July of each year.

142.  Exemption from income tax

(1)  All income derived by the Corporation from the sources specified in section

121 shall be exempt from income tax and all contributions to the Corporation

made by persons subject to the payment of tax shall be tax deductible. 72

(2)  The Corporation may, subject to the approval of the Board and the conditions

of any trust created in respect of any property, invest all or any of its funds in

any security prescribed by the Trustees Investment Act, or in such other

securities as the Board may approve.

143.  Legal proceedings

(1)  Subject to the provisions of this Act, the provisions of the Public Officers

Protection Act shall apply in relation to any suit instituted against the

Corporation a member of the Board or an officer or employee of the

Corporation.

(2)  No suit shall lie against the Corporation a member of the Board or any of its

officer or employees for any act done in pursuance or execution of this Act or

any other law or enactment, or of any public duty or authority in respect of any

alleged neglect or default in the execution of this Act or any other law or

enactment, duty or authority, or be instituted in any court unless it is

commenced—

(a)  within three months after the act, neglect or default complained of; or

(b)  in the case of a continuation of damage or injury, within six months

after the ceasing of the act complained of.

(3)  No suit shall be commenced against the Corporation or any officer or

employee before the expiration of a period of one month after written notice of

the intention to commence the suit shall have been served on the Corporation

by the intending plaintiff or his agent.

(4)  The notice referred to in subsection (3) of this section shall clearly and

explicitly state the cause of action, the particulars of the claim, the name and

place of abode of the intending plaintiff and the relief being  claimed.

144.  Service of court processes on Corporation

A notice, summons or other document required or authorized to be  served on the

Corporation under the provisions of this Act or any other law or enactment may be

served by delivering it to the office of the Managing Director of the Asset

Management.

145.  Restriction on execution against the Corporation’s property

(1)   In any action or suit against the Corporation, no execution or attachment of

process in any form shall be issued against the Corporation unless not less

than three months’ notice of the intention to execute or attach has been

given to the Corporation.  73

(2)  Any sum of money which may by the  judgment of any court be awarded

against the Corporation shall, subject to any direction given by the court

where no notice of appeal against the judgment has been given, be paid

from the Fund of the Corporation.

146.  Indemnity

(1)  Every member of the Board and every employee of the Corporation shall be

indemnified out of the assets of the Corporation against any liability incurred

in defending any proceeding against the Corporation, whether civil or

criminal, if such proceedings are brought against the  a member of the Board

or employee in their official capacity.

(2)  Notwithstanding the provisions of subsection (1) of this section, the

Corporation shall not indemnify any member of the Board or employee or

staff  of the  Corporation for any liability incurred as a result of the wilful

negligence of the member or employee, as the case may be, or conduct or

acts which such a person knew or ought to have known to be unlawful.

147.  Protection of land belonging to the Management Company

(1)  Land vested in the Management Company shall not be liable to be acquired

compulsorily under any enactment or law; and notwithstanding anything in

any other enactment or law, no mining operations shall be carried on, in or

under any land vested in the Management Company or any land over which

the Management Company  is entitled to rights of support for the benefit of

lands so vested except with the prior consent in writing of the Minister.

(2)  For the purpose of this section, “land” includes any land under water beyond

the territorial waters of Nigeria to which Nigeria is for the time being entitled

to any exclusive rights.

I.  NATIONAL OIL COMPANY

148.  Incorporation of the National Oil Company

The Minister shall, not later than three  months after the effective date, take such

steps as are necessary under the Companies and Allied Matters Act to incorporate

the National Oil Company as a public company limited by shares, which shall be

vested with certain assets and liabilities of the NNPC.

149.  Exemption from application of certain existing laws   74

The National Oil Company shall not be subject to the provisions of the Fiscal

Responsibility Act 2007 and the Public Procurement Act 2007.

150.  Share holding in the National Oil Company

At the time of its incorporation, the initial shares of the National Oil Company shall be

held by a nominee of the Ministry of Petroleum Resources and Ministry of Finance

Incorporated on behalf of the Government.

151.  Divestment of shares of the National Oil Company

Notwithstanding the provisions of section  150  of this Act, the Government shall at

any time within six years from the date of incorporation of the National Oil Company,

divest up to thirty percent of the authorised shares of the National Oil Company to

the public in a transparent manner on the Nigerian Stock Exchange.

152.  Transfer of assets and liabilities

(1)  Following incorporation of the National Oil Company, the assets and liabilities

held by the NNPC on behalf of the Federal Government of Nigeria except the

interests in the unincorporated joint ventures and Nigerian Gas Company

Limited shall be vested in the National Oil Company within twelve to twentyfour months from the Effective Date.

(2)  The transfer of liability or obligation under this section releases the NNPC

from the liability or obligation with respect to the transferred assets.

(3)   The National Oil Company shall without further assurance be entitled to

enforce or defend all obligations for or against NNPC in respect of the portion

of interests mentioned above as if the National Oil Company were the original

party to such obligations.

(4)   In relation to the transferred assets, all bonds, loans, financing agreements,

alternative financing agreements, joint operating agreements, production

sharing agreements, sole risk agreements, hypothecations, securities, deeds,

contracts, instruments, documents and working arrangements subsisting

immediately before the initial transfer date and to which NNPC was a party

shall,  on and after the initial date, be as fully effective and enforceable

against or in favour of the National Oil Company as if, instead of NNPC, the

National Oil Company had been named therein.

(5)  Any pending action or proceeding  in relation to the transferred assets,

brought by or against NNPC immediately before the initial transfer date may

be enforced or continued, as the case may be, on and after that date by or

against the National Oil Company in the same way as if this Act had not been

passed. 75

(6)  Notwithstanding the provision of subsection (2) of this section:

(a)  no action or other proceeding shall be commenced against the National

Oil Company in respect of any employee, asset, liability, right or

obligation if, had there been no transfer, the time for commencing the

action or other proceeding would have expired; and

(b)  the transfer of assets and liabilities to the National Oil Company under

subsection  (1) of this section shall not be deemed to –

(i)  constitute a breach, termination, repudiation or frustration of any

contract, including a contract of employment or insurance;

(ii)   constitute a breach of any Act, regulation or by-law; or

(iii)  constitute an event of default or force majeure;

(iv)  give rise to a breach, termination, repudiation or frustration of

any licence, permit or other right;

(v)  give rise to any right to terminate or repudiate a contract,

licence, permit or other right; and

(vi)  give rise to any estoppel.

(7)  Subsection (6) of this section shall apply to the contracts as may be

prescribed by any regulation made for this purpose.

(8)  Subject to subsection (7) of this section, nothing in this Act and nothing done

as a result of a transfer under subsection (1) of this section shall create any

new cause of action in favour of:

(i)   holder of a debt instrument issued by the  NNPC before the transfer

date; or

(ii)  party to a contract with the NNPC that was entered into before the

transfer date.

(9)  Any guarantee or surety which was given or made by the Federal Government

of Nigeria or any other person in respect of any debt or obligation of the

NNPC, and which was effective immediately before the initial transfer of the

principal debt or obligation, shall remain fully effective against the guarantor or

surety on and after the initial transfer date in relation to the repayment of the

debt or the performance of the obligation, as the case may be, by the National

Oil Company to which the principal debt or obligation was transferred.

(10)  The assets of the subsidiaries of the NNPC listed under the Public Enterprises

Privatisation and Commercialisation Act shall be de-listed from the Effective 76

Date of this Act and the power of attorney earlier assigned to the Bureau of

Public Enterprises shall stand vacated.

153.  Exemption from stamp duty

Stamp duty shall not be chargeable under the Stamp Duties Act  in respect of any

transfer made or transaction entered into pursuant to this Part on which, except for

the exemption granted under this section, stamp duty would have been payable and

in particular, and without derogation from the foregoing, no stamp duty shall be

chargeable:

(a)  during the incorporation of the National Oil Company and the successor

companies or any subsequent increase to their authorised share capital, prior

to the transfer of a majority interest to the public or private investors; or

(b)  in respect of any other transfer of rights and assets pursuant to this Part.

154.  Transfer of employees to the National Oil Company

The transfer of employees of NNPC to the National Oil Company shall be in

accordance with provisions of section 358 of this Act.

155.  Directions to NNPC on matters related to transition

Prior to the vesting of the assets and liabilities of NNPC in the National Oil Company,

the Minister may give to the Board of Directors of  NNPC directions in writing to

ensure the proper transfer of the assets and liabilities of NNPC to the National Oil

Company, and the Board of Directors shall, without delay, comply with every such

direction.

156.  Management and governance of the National Oil Company

(1)  Upon incorporation of the National Oil Company in pursuance of section 148

of this Act, the National Oil Company shall be organized and managed on the

basis of the provisions of its Memorandum and Articles of Association.

(2)   The National Oil Company shall be subject to the Governance Rules of the

Securities and Exchange Commission.

157.  Certain exemption from rates

(1)  Oil pipelines and other installations belonging to the National Oil Company

shall not be regarded as hereditaments or tenements to be valued for rating

purposes

(2)  For the purposes of this subsection, the expression “oil pipelines and other

installations” include oil rigs, refineries, power generating plants, pumping 77

stations, tank farms and similar installations but do not include office or

residential buildings.

(3)  Except as provided in subsection (1) of this section, nothing in this Act shall

be deemed to exempt the National Oil Company from liability for any tax, duty,

rate, levy or other charge whatsoever, provided that the National Oil Company

shall not be liable to pay any such tax, duty, rate, levy or charge unless every

company liable to tax under this Act is also liable for such payment.

158.  Protection of National Oil Company’s land

(1) Land vested in the National Oil Company shall not be liable to be acquired

compulsorily under any enactment or law;

(2) Notwithstanding anything in any other enactment or law, no mining operations

shall be carried on, in or under any land vested in the National Oil Company

or any land over which the National Oil Company is entitled to rights of

support for the benefit of lands so vested except with the prior consent in

writing of the Minister.

(3)  For the purpose of this section, “land” includes any land under water beyond

the territorial waters of Nigeria to which Nigeria is for the time being entitled to

any exclusive rights.

J.  NATIONAL GAS COMPANY PLC

159.  Incorporation of the National Gas Company

The Minister shall, not later than three months after the Effective Date of this Act,

take such steps as are necessary under the Companies and Allied Matters Act to

incorporate the National Gas Company Plc as a company, limited by shares, which

shall be vested with certain assets and liabilities of NNPC.

160. Exemption from certain existing Legislation

The National Gas Company Plc shall not be subject to the provisions of the Fiscal

Responsibility Act 2007 and the Public Procurement Act 2007.

161.  Shareholding in the National Gas Company Plc

At the time of its incorporation, the initial shares of the National Gas Company shall

be held by a nominee of the Ministry of Petroleum Resources and Ministry of

Finance Incorporated on behalf of the Government.

162.  Divestment of shares of the National Gas Company Plc

Notwithstanding the provisions of section 161 of this Act, the Government shall at

any time within six years from the date of incorporation of the National Gas Company 78

Plc, divest up to forty nine percent of the shares of the National Gas Company to the

public in a transparent manner on the Nigerian Stock Exchange.

 

163.  Transfer of assets and liabilities

(1)  Following incorporation of the National Gas Company Plc, the assets and

liabilities held by NNPC on behalf of the Federal Government of Nigeria

except Nigeria Gas Company Plc shall be vested in the National Gas

Company Plc within twelve to twenty-four months from the Effective Date.

(2)  The transfer of liability or obligation under this section releases the NNPC

from the liability or obligation with respect to the transferred assets.

(3)   The National Gas Company Plc shall without further assurance be entitled to

enforce or defend all obligations for or against NNPC in respect of the portion

of interests mentioned in this section as if the National Gas Company Plc

were the original party to such obligations.

(4)  In relation to the transferred assets, all bonds, loans, financing agreements,

alternative financing agreements, joint operating agreements, sole risk

agreements, hypothecations, securities, deeds, contracts, instruments,

documents and working arrangements subsisting immediately before the

initial transfer date and to which NNPC was a party shall,  on and after the

initial date, be as fully effective and enforceable against or in favour of the

National Gas Company Plc as if, instead of NNPC, the National Gas

Company Plc had been named therein.

(5)  Any pending action or proceeding  in relation to the transferred assets,

brought by or against NNPC immediately before the initial transfer date may

be enforced or continued, as the case may be, on and after that date by or

against National Gas Company in the same way as if this Act had not been

passed.

(6)  Notwithstanding the provision of subsection (3) of this section:

(a)  no action or other proceeding shall be commenced against the National

Gas Company Plc in respect of any employee, asset, liability, right or

obligation if, had there been no transfer, the time for commencing the

action or other proceeding would have expired, and

(b)  the transfer of assets and liabilities to the National Gas Company Plc

under subsection  (2) of this section shall not be deemed to –

(i)  constitute a breach, termination, repudiation or frustration of any

contract, including a contract of employment or insurance;

(ii)   constitute a breach of any Act, regulation or by-law; or79

(iii)  constitute an event of default or force majeure;

(iv)  give rise to a breach, termination, repudiation or frustration of

any licence, permit or other right;

(v)  give rise to any right to terminate or repudiate a contract,

licence, permit or other right; and

(vi)  give rise to any estoppels.

(7)  Subsection (6) of this section does not apply to the contracts as may be

prescribed by any regulation made for that purpose.

(8)  Subject to subsection (7) of this section, nothing in this Act and nothing done as

a result of a transfer under subsection (1) of this section shall create any new

cause of action in favour of a –

(i)   holder of a debt instrument issued by NNPC before the  date; or

(ii)  party to a contract with NNPC that was entered into before the transfer

date.

(9)  Any guarantee or surety which was given or made by the  Government of

Nigeria or any other person in respect of any debt or obligation of NNPC, and

which was effective immediately before the initial transfer of the principal debt or

obligation, shall remain fully effective against the guarantor or surety on and

after the initial transfer date in relation to the repayment of the debt or the

performance of the obligation, as the case may be, by the National Gas

Company Plc to which the principal debt or obligation was transferred.

164.  Exemption from stamp duty

Stamp duty shall not be chargeable under the Stamp Duties  in respect of any

transfer made or transaction entered into pursuant to this Part on which, except for

the exemption granted under this section, stamp duty would have been payable and

in particular, and without derogation from the foregoing, no stamp duty shall be

chargeable:

(a) during the incorporation of the National Gas Company Plc and the successor

companies or any subsequent increase to their authorised share capital, prior

to the transfer of a majority interest to the public or private investors; or

(b)  respect of any other transfer of rights and assets pursuant to this Part.

165.  Transfer of employees to the National Gas Company

The transfer of employees of NNPC to the National Gas Company shall be in

accordance with provisions of section 358 of this Act. 80

166.  Directions to NNPC on matters related to transition

Prior to vesting of the assets and liabilities of NNPC in the National Gas Company,

the Minister may give to the Board of Directors of NNPC directions in writing in order

to ensure the proper transfer of the assets and liabilities of NNPC  to the National

Gas Company, and the Board of Directors shall, without delay, comply with every

such direction.

167.  Management and  governance of the National Gas Company upon

incorporation

(1)  Upon incorporation of the National Gas Company in pursuance of section 159

of this Act, the National Gas Company shall be organized and managed on

the basis of the provisions of its Memorandum and Articles of Association.

(2)  The National Gas Company shall be subject to the Governance Rules of the

Securities and Exchange Commission.

168.  Certain exemption from rates

(1)  Gas pipelines and other installations belonging to the National Gas Company

shall not be regarded as hereditaments or tenements to be valued for rating

purposes, and for the purposes of this subsection, the expression “Gas

pipelines and other installations” include Gas rigs, refineries, power

generating plants, pumping stations, tank farms and similar installations but

do not include office or residential buildings.

(2)  Except as provided in subsection (1) of this section, nothing in this Act shall

be deemed to exempt the National Gas Company from liability for any tax,

duty, rate, levy or other charge whatsoever, provided that the National Gas

Company shall not be liable to pay any such tax, duty, rate, levy or charge

unless every company liable to tax under this Act is also liable for such

payment.

169.  Protection of National Gas Company’s land

(1) Land vested in the National Gas Company shall not be liable to be acquired

compulsorily under any enactment or law;

(2) Notwithstanding anything in any other enactment or law, no mining operations

shall be carried on, in or under any land vested in the National Gas Company

or any land over which the National Gas Company is entitled to rights of

support for the benefit of lands so vested except with the prior consent in

writing of the Minister. 81

(3)  For the purpose of this section, “land” includes any land under water beyond

the territorial waters of Nigeria to which Nigeria is for the time being entitled to

any exclusive rights.

 

PART III

UPSTREAM PETROLEUM

170.  ADMINISTRATION OF ACREAGE

(1)  All acreage for exploration, development and production of petroleum in

Nigeria shall be administered by the Inspectorate.

(2)  The title to all data related to upstream petroleum operations are accordingly

vested in the Federal Government and shall be administered by the

Inspectorate.

171.  National grid system

(1)  The Inspectorate shall adopt a national grid system for petroleum acreage

management and such grid system shall be based on the Universal

Transverse Mercator (U.T.M.) coordinate system.

(2)  The basic unit shall be a parcel of two by two kilometers, subject to

adjustment zones and the national boundary, in which case a parcel shall be

the part of the parcel in the adjustment zone or on Nigerian territory as

described in subsection (1) of this section.

(3)   The Inspectorate shall define a numbering system for the parcels which shall

allow for the subdivision and aggregation of these parcels.

(4)  The grid system shall be used for the definition of licence and lease areas,

relinquishments, bid procedures, identification of well locations, petroleum

conservation measures and such other regulatory and acreage management

procedures.

(5)  Subject to the provisions of subsection (1) of this section any current

boundaries of licences and leases that do not conform with the new grid

system shall remain unaltered, and parcels shall be apportioned accordingly.

172.  Licences and leases

(1)  Subject to this Act, the Minister may grant:

(a)   a   petroleum exploration  licence to carry out exploration on a nonexclusive basis; 82

(b)   a petroleum prospecting licence to prospect for petroleum; and

(c)   a  petroleum mining  lease, to search for, win, work, carry away and

dispose of petroleum.

(2)  Subject to the provisions of this Act, where the Minister decides to grant a

licence or lease under this section, it shall be awarded –

(a)   to the winning bidder pursuant to the bid process prescribed in section

190 provided the winning bidder has complied with all requirements

specified in the bid process; or

(b)   directly to the existing licensee or lessee pursuant to the provisions of

section 193 of this Act;

(3)  Subject to the provisions of this Act, the Minister may grant a petroleum

exploration licence to any qualifying company over any area, excluding areas

that are  the  subject of petroleum prospecting licences or petroleum mining

leases.

(4)  Every petroleum prospecting licence or petroleum mining lease shall be in

respect of petroleum.

(5)  A licence or lease under this section may be granted only to a company

incorporated in Nigeria under the Companies and Allied Matters Act or any

corresponding law.

(6)  It shall be a condition under any petroleum exploration licence, petroleum

prospecting licence and petroleum mining lease that at all times the operator

of the upstream petroleum operations shall be a company that qualifies as an

operator.

173.  Power to enter into contracts

(1)  Where the Minister grants any licence or lease under subsection (1) of section

172 of  this Act, the licensees or lessees, by such grant and without further

assurance, shall be empowered to enter into any contract for the exploration,

prospecting, production and development of oil or gas, or both,  as the case

may be, in respect of any licence or lease held by the  licensees or lessees,

upon such terms and conditions as the  licensees or lessees may determine,

and with any company qualified under conditions prescribed by this Act.

(2)  The power to enter into contracts given under this section shall not confer the

right to assign an interest in any licence or lease, except in compliance with

the terms of section 194 of this Act. 83

174.  Confidentiality clauses

(1)  Confidentiality clauses or other clauses contained in licences, leases,

agreements or contracts for upstream petroleum operations that are for the

purpose of preventing access to information and documents by third parties in

respect of any payments of royalties, fees and  bonuses of whatever nature,

and taxes, shall be void and of no effect.

(2)  Subsections (1) and (4) of this section shall not apply to proprietary industrial

property rights owned by any of the parties to a licence, lease, agreement or

contract to which the said subsections (1) and (4) apply, which shall be

exempted from the scope of mandatory disclosure to the extent that

confidentiality in such cases is protected by any law in force in Nigeria relating

to the freedom of information, or by any treaty obligations of Nigeria under

international law.

(3)  The question as to whether information or documents are proprietary

industrial property rights and within the ambit of subsection (2) of this section

shall be decided by the owner of such information and where the Inspectorate

disputes such determination, the matter shall be decided by an independent

expert appointed by the Inspectorate and the relevant licensee or lessee.

(4)  Every company involved as licensee, lessee or contractor shall for each

license and each lease provide a yearly summary of all revenues and costs on

which the payments under subsection (1) of this section were based within

three years after the expiration of each calendar year and the provisions with

respect to confidentiality under subsection (1) of this section shall apply to the

requirement to provide such summaries.

(5)  The Inspectorate shall define the required detail and classification of the

summary under subsection (4) of this section and such summaries shall be

non-confidential and published on the website of the Inspectorate together

with the revenue information pursuant to subsection (1) of this section.

(6)  The text of any subsisting or future licence or lease or contract with the

National Oil Company and any amendments or side letters thereto shall not

be confidential and shall be published on the website of the Inspectorate and

the provisions of sub-section (1) of this section shall apply.

(7)  The texts pursuant to subsection (6) of this section shall be on the website of

the Inspectorate within one year after the commencement of this Act,  and

where such information is not supplied to the Inspectorate, a company in

default shall be liable to a penalty of US $ 10,000 for every day such

information is not available after the date required by the Inspectorate.

(8)  All geological, geophysical, geochemical and other technical petroleum data

obtained during upstream petroleum operations as determined by the 84

Inspectorate shall be provided directly to the national petroleum data bank of

the Inspectorate electronically  within  three months of such data being

obtained by any licensee or lessee and hard copies within one month

thereafter.

(9) The data referred to in subsection 8 of this section shall not be confidential,

except for data obtained under a petroleum exploration and prospecting

licences for a period of five years or until such time the exploration period

ends or the related acreage is relinquished, whichever is the earlier.

(10)  With respect to petroleum exploration licences, the Inspectorate may agree to

a period of confidentiality where the licensee obtains the data for the main

purpose of selling the data to interested parties.

(11) All data in the national petroleum data bank shall be accessible for any

interested person under such access agreements as may be determined by

the Inspectorate.

(12)  All information pursuant to subsection (1) of this section shall be nonconfidential and the Inspectorate shall publish this information on their

website.

175.  Petroleum exploration licence

(1)  The holder of a petroleum exploration licence shall have the non-exclusive

right to carry out geological, geophysical and geochemical exploration for

petroleum within the area of his licence and to drill coreholes not deeper than

one hundred and fifty meters using only percussion drilling techniques unless

otherwise allowed by the Inspectorate.

(2)  A petroleum exploration licence shall be valid for not more than three years

and shall not include any right or option to win, get, work, store, carry away,

transport, export or otherwise treat petroleum discovered in or under the said

licence area.

(3)  Any petroleum exploration shall be under the supervision of the Inspectorate.

176.  Petroleum Prospecting Licence

The holder of a petroleum prospecting licence shall have:

(a)  the exclusive right to carry out petroleum exploration operations within the

area of its licence; and

(b)  have the right to carry away and dispose of crude oil, natural gas or bitumen

won during prospecting operations as a result of production tests, subject to

the fulfilment of obligations imposed by or under this Act  or any other

enactment in force at the time. 85

177.  Duration and area of Petroleum Prospecting Licence

A petroleum prospecting licence shall be –

(a)  with respect to onshore and shallow water areas, for a duration of not more

than five years, consisting of an initial exploration period of three years and a

renewal period of two years, with a possibility for further extensions due to an

appraisal period pursuant to subsection (8)  of  section of this Act and

significant gas discovery periods, pursuant to subsection (11) of section 178

of this Act and other extensions permitted under this Act and the petroleum

prospecting licence area shall not be more than five hundred  square

kilometres and not less than one parcel    (four square kilometers); and

(b)  with respect to deep water areas and frontier acreage, for a duration of not

more than eight years, consisting of an initial exploration period of five years

and a renewal period of three years, with a possibility for further extensions

due to appraisal periods, pursuant to subsection (8) of section 178 of this Act

and significant gas discovery periods, pursuant to subsection (11) of section

178 of this Act and other extensions permitted under this Act and the initial

petroleum prospecting licence area shall not be more than one thousand

square kilometres and not less than one parcel  (four square kilometers).

178.  Work commitment, commercial discovery and significant gas discovery

during petroleum prospecting licence

(1)  A petroleum prospecting licence shall contain the requirement for the licensee

to commit to a work programme.

(2)  The work-programme referred to under subsection (1) of this section shall

oblige the licensee to:

(a)  explore the relevant area, using geological, geophysical and any other

acceptable methods of investigation for the purpose of arriving at the

prospects until the area has been adequately explored for that purpose;

(b)  commence seismic investigations  provided the licensee has not

already begun to do so; and

(c)  within eighteen months of granting such licence to begin drilling

operations with a modern petroleum well drilling outfit.

(3)  During the initial period, the licensee shall commit to the drilling of at least one

exploration well to a specified minimum depth, provided that the licence may

require more than one well to a minimum depth.

(4)  Where the licensee requests a renewal,  the licensee shall, except where the

Inspectorate otherwise authorizes,  commit to the drilling of at least one

further exploration well to a specified minimum depth, provided that the 86

licensee may require more than one well to a minimum depth during such

renewal.

(5)  An exploration well shall be a well that in the opinion of the Inspectorate is

aimed at discovering petroleum in a separate geological feature or structure in

which petroleum has not been previously discovered.

(6)   Any exploration well drilled in excess of the minimum work programme

specified in the licence during the initial period can be credited to the work

obligation under the renewal.

(7)   Where the licensee makes a petroleum discovery during the initial period or

renewal, it shall inform the Inspectorate within one hundred and twenty days

or within such extended time frame as granted by the Inspectorate, after

making such discovery whether the licensee considers that the petroleum

discovery merits appraisal.

(8)   Where the licensee considers that a discovery merits appraisal, it shall submit

for approval to the Inspectorate:

(a)  a commitment to an appraisal programme of a duration of not more

than two years and of a scope and nature that will permit the licensee

to declare a commercial discovery in case results of the appraisal are

positive; and

(b)  the appraisal area which shall not be larger than the parcels covering

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