Oil and gas taxation in nigeria

In accordance with the Petroleum Act, the Ministry of Petroleum Resources, through the Department of Petroleum Resources is empowered to oversee the license allocation process in the oil and gas sector. It is granted for one year and is renewable upon satisfaction of certain conditions. Pockets of change introduced to the laws in the past were at best, cosmetic, as they neither addressed the fundamental flaws in those laws, nor the problems with the institutions set up under them. Under Nigerian law, priority is given to employment of Nigerian workers. The Minister has the power to grant licences to private investors to participate across the entire spectrum of oil and gas downstream operations Sections 2 and 3 of the Petroleum Act

The key points addressed in the legislation are as follows: pursuant to Section 1 of the Petroleum Act, the entire ownership and control of all petroleum in, under or upon any land in Nigeria, under the territorial waters of Nigeria or forming part of the Exclusive Economic Zone is vested in the State; ie, the federal government of Nigeria; the Act empowers the Minister to grant the licences required for upstream operations the exploration, prospecting and production of crude oil and downstream operations operating a refinery, and the importation, storage, sale and distribution of petroleum products , and to provide regulations for the upstream and downstream petroleum activities; and the Act provides the operational framework for the licences required to operate in both the upstream and downstream sectors of the petroleum industry. The Regulations 37 include the word 'takeover' in addition to an 'assignment', with reference to applications to the Minister for the 'assignment or takeover' of an OPL or OML. Other contractual arrangements are based on the contract terms between the parties, and most private sector gas supply contracts are concluded on this basis. By using our website you agree to our use of cookies as set out in our Privacy Policy. Where this is not done, the contractor has the right to take necessary legal steps to remedy the situation.

Another way to acquire interest in upstream assets is for an investor to bid for the acquisition of an interest in a marginal field during marginal field bid rounds conducted by the federal government of Nigeria FGN. The holder of an OPL or OML may assign his or her interests to other persons either in part or whole, subject to the consent of the Minister. These laws prescribe penalties for defaulters such as fines, terms of imprisonment and damages. This is particularly so if the refinery is to be relocated. Royalties can be paid in cash or by delivery of an equivalent volume of petroleum.

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The Ministry is also responsible for conducting environmental impact assessments in respect to projects in the oil and gas industry. Downstream licences are issued by the Minister, through the Department of Petroleum Resources. An OEL is non-exclusive and valid from the date it is granted until December 31st of the year following the date of the grant. Eventually, an omnibus bill, the Petroleum Industry Bill the PIB , was fashioned to cater to all the various facets of the industry—the institutions, the fiscal regime and community concerns, among others. Oil Prospecting Licence Duration: an OPL confers an exclusive right on the licensee to explore and prospect for petroleum within the area of the licence, and its duration is determined by the Minister, subject to a maximum period of five years inclusive of any renewals. Section 6 of the NOSDRA Act provides the primary functions of the NOSDRA, which include i ensuring compliance with all existing environmental legislation and detecting oil spills in the petroleum sector, and ii receiving reports of oil spillages and co-ordinating oil spill response activities.
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There are currently no local legal or regulatory restrictions on production rates in Nigeria. Oil and Gas Report. To view the full article, please click here. However, a Petroleum Host Community Bill is pending before the National Assembly that seeks to establish a pool of funds for the development of petroleum host communities, which will be utilised for the infrastructure and socio-economic development of the communities, amongst other matters. Attached below is Nigeria's open data policy, published in December Strategic Industrial Sector: mainly industries that utilise gas as feedstock for the production of value-added products. Other Permits The other permits required to conduct operations include the following.
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To produce demographic feedback for our content providers "Contributors" who contribute Content for free for your use. The Minister has the power to grant licences to private investors to participate across the entire spectrum of oil and gas downstream operations Sections 2 and 3 of the Petroleum Act This approval stage is to confirm the feasibility of the proposed project, market plan, products specification, site selection, proposed crude oil or feedstock supply plan, evacuation plan, etc. The state participates in the oil and gas sector through its national oil company, NNPC , and its various subsidiaries, which represent government interests in the various production arrangements and contracts in the oil and gas sector. Expand All. A marginal field is a field that has oil and gas reserves booked and reported annually to the DPR, and has remained unproduced for a period of more than ten years. Corporate Tax.
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Unfortunately, the PIFB does not seem to align with the intent of government in that policy, by deepening the fiscal incentives for gas investment and production. Also, there is a Climate Change Commission Bill the CCC Bill being reviewed by the House of Representatives, which seeks to provide the legal framework for climate change that attracts investors and enables the domestication and implementation of international climate change agreements to which Nigeria is a party. However, the PIB is attempting to resolve this confusion by providing that a takeover, merger or acquisition, including a change of control of a parent company outside Nigeria, shall be deemed an assignment within Nigeria and shall require the Minister's consent. Ron Bousso. Some of these laws also establish specialist agencies with primary responsibility for monitoring and enforcing environmental policies. Section 6.
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Section 3 1 of the Associated Gas Re-Injection Act provides that gas operators are to obtain the consent of the Minister before flaring gas produced in association with oil. Oil Prospecting Licence Duration: an OPL confers an exclusive right on the licensee to explore and prospect for petroleum within the area of the licence, and its duration is determined by the Minister, subject to a maximum period of five years inclusive of any renewals. Pursuant to Section 4 1 of the Petroleum Act , no person is allowed to import, store, sell or distribute any petroleum product in Nigeria without a licence granted by the Minister. The charge came after the central Nigerian government and local states settled a dispute over the distribution of revenue from hydrocarbon production. Marginal Fields For the allocation of marginal fields, the federal government of Nigeria conducts a bid licensing round. Discover Thomson Reuters. Article Tags.
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