PETROLEUM INDUSTRY ACT, 2021
LAWS OF NIGERIA BY GENERAL CATEGORIES
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
PETROLEUM INDUSTRY ACT, 2021
AN ACT TO PROVIDE LEGAL, GOVERNANCE, REGULATORY AND FISCAL FRAMEWORK FOR THE NIGERIAN PETROLEUM INDUSTRY, THE DEVELOPMENT OF HOST COMMUNITIES AND FOR RELATED MATTERS.
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.
LAWS OF THE FEDERAL REPUBLIC OF NIGERIA
LAWS OF THE FEDERATION OF NIGERIA BY YEARS (MADE BETWEEN 1999-DATE)
