Insights, Oil and Gas

Oil Licensing Regime Under the Petroleum Industry Act 2021: Grounds for the Revocation of a Petroleum Prospecting Licence (PPL) (Part

Under the Petroleum Act (PA), there were 5 major grounds on which an Oil Prospecting Licence (OPL) could be revoked. Following the enactment of the Petroleum Industry Act (PIA) 2021, the grounds for revocation of a Petroleum Prospecting Licence (hereinafter referred to as “PPL” or the “Licence”) have been expanded to include circumstances not withtin the contemplation of the PA. In the subsequent paragraphs, we shall examine these modifications.

Innovations Introduced by the PIA
1. The nationality of the management or place of incorporation of the controlling company of the Licensee is no longer a ground for revocation.
2. Although the Minister retains the power to revoke a License for failure to furnish reports and data required by law, this can only be exercised after the Licensee has been issued a written notice of such default by the Nigerian Upstream Petroleum Regulatory Commission (the “Commission”).
3. It is no longer sufficient for the Licensee to carry on operations continuously, in a business-like manner and according to good oilfield practice, the Minister now possesses power to revoke a Licence where petroleum operations within the Licence area do not meet international industry standard amongst others.
4. The PIA makes express provision for the assignment, novation or transfer of any interest in a PPL in contravention of the PIA to be a ground for revocation. This was impliedly provided for in the Petroleum Act by the combined reading of Paragraph 14 and 25(1)(b) of the First Schedule to the PA.

Other grounds for revocation introduced by the PIA include where the Licensee:
a. interrupts production without justification for over a period of 180 days or for a period as specified in the licence or approved field development plan,
b. obtained an interest in the licence through false representation or in contravention of corrupt practices and money laundering laws…

 

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