Insights, Oil and Gas

Oil Licensing Regime Under the Petroleum Industry Act 2021 (Part 2): Petroleum Prospecting Licence (Contd.)

In the preceding article of this series, we examined a number of modifications made by the Petroleum Industry Act (PIA) 2021 to the Oil Prospecting Licence (OPL) regime in Nigeria in terms of the granting authority, award process and duration of the licence. In the subsequent paragraphs, we shall review modifications relating to the assignment, surrender and revocation of an OPL.

ASSIGNMENT
The Petroleum Act (PA) prohibited a licensee from assigning its OPL or any right, power or interest accruing therefrom without the consent of the Minister of Petroleum Resources (the “Minister”). Under the new regime, such consent of the Minister can only be granted upon recommendation of the Nigerian Upstream Petroleum Regulatory Commission (the “Commission”). Additionally, a licensee is now prohibited from novating or transferring its interest under a Petroleum Prospecting Licence (PPL) without the prior written consent of the Minister on recommendation of the Commission.

Whereas the key requirements for obtaining the consent of the Minister under the PA was that the Minister was satisfied that the proposed assignee;
a. had a good reputation,
b. possessed sufficient technical know-how and financial capability to carry out the work programme and
c. was acceptable by the Federal Government,

the PIA on the other hand requires that the proposed assignee;
a. is incorporated in Nigeria,
b. is of good reputation,
c. possesses sufficient technical know-how and financial resources to execute the work programme and
d. complies with the Federal Competition and Consumer Protection Act (FCCPA).

Although the requirement for incorporation in Nigeria was applicable under the PA though not explicitly stated in above referenced section of the PA, the requirement for compliance with the FCCPA is a new addition as the PA predates the FCCPA. Furthermore, the PIA now makes provision for a timeframe for processing assignment, transfer and novation applications. Application for the transfer, novation or assignment of a PPL must be acted upon by the Commission within 60 days of receipt.[5] The Minister is mandated to consider such applications within 60 days of receipt of the recommendation of the Commission and an approval of the application shall not to be unreasonably withheld.

To read the full article, kindly download the PDF

Practice Key Contacts

More To Read

17/05/2024
Concurrent Delay in Construction Contracts: A Pragmatic Perspective

Introduction Delays on construction projects are common, often creating disputes over responsibility, extension of time and liquidated damages. Concurrent delays, where both the contractor and

07/05/2024
Innovating Finance: How IP Insurance Can Transform Nigerian Innovative Startups.

Introduction In the evolving global economy, intellectual property (IP) has emerged as a critical asset for businesses, especially for startups and innovation-driven enterprises. IP assets,