Insights, Oil and Gas

Oil Licensing Regime Under the Petroleum Industry Act 2021 (Part 4): Petroleum Mining Lease

Having satisfied all conditions imposed on the licensee and contained in the Oil Prospecting Licence (OPL), and upon commercial discovery of oil, a holder of an OPL was required to obtain an Oil Mining Lease (OML). The OML not only entitled the holder to the right to win and work petroleum discovered but also the right to export such petroleum from site. Although the OML, now referred to as Petroleum Mining Lease (PML) under the Petroleum Industry Act (PIA) 2021, appears to be very similar to the PML, certain features of the lease have been modified under the PIA. In the ensuing paragraphs, we shall briefly examine these changes.

As stated above, an OML was granted only to applicants who had satisfied all obligations imposed and had discovered oil in commercial quantities. The holder of an OML was granted an exclusive right to carry on oil exploration and prospecting operations within the lease area and the right to win, get, work, store, carry away, transport, export or otherwise treat petroleum discovered in or under the lease area on an exclusive basis.

To secure the grant of a PML under the PIA, an applicant is required to have-
a. discovered oil or gas or both in commercial quantity;
b. performed conditions imposed on it and contained in the PPL; and
c. received approval from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) in respect of its field development plan.

Furthermore, it is a prerequisite of the grant of a PML for an applicant to commit to developing and producing crude oil or natural gas according to the field development plan or to restart or continue petroleum production within the lease area. It is noteworthy that the exclusivity granted under a PML only covers the right to win, and dispose of crude oil, condensates and natural gas discovered and the right to carry on prospecting operations within the lease area. Exploration operations within the lease area, is on a non-exclusive basis…

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