Powers and Delegation in Petroleum Licensing and Regulation
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Questions and Answers

Which agency is responsible for the establishment of the Nigerian Midstream and Downstream Petroleum Regulatory Authority?

  • The Commission
  • The Authority (correct)
  • The Special Investigation Unit
  • The Nigerian National Petroleum Company Limited

    • Which entity is responsible for the management of petroleum resources?

  • The Authority
  • The Nigerian National Petroleum Company Limited
  • The Special Investigation Unit
  • The Commission (correct)

    • What is the purpose of the Special Investigation Unit?

  • To investigate and prosecute offenses under the Act (correct)
  • To conduct audits of NNPC Limited
  • To establish incorporated joint venture companies
  • To manage petroleum resources

    • What is the purpose of the Nigerian National Petroleum Company Limited?

    <p>To manage petroleum resources</p> Signup and view all the answers

    Which type of license is required for midstream and downstream gas operations?

    <p>Gas transportation pipeline license</p> Signup and view all the answers

    What are the general duties of a gas distributor?

    <p>Providing service to customers</p> Signup and view all the answers

    What is the purpose of the gas network code?

    <p>Facilitating access to gas operations</p> Signup and view all the answers

    Which of the following is NOT a responsibility of the Petroleum Industry/let?

    <p>Managing petroleum reserves and installations</p> Signup and view all the answers

    What does the Petroleum Industry/let keep public registers of?

    <p>Licenses and leases granted by the Minister</p> Signup and view all the answers

    What is one of the areas where the Petroleum Industry/let sets and enforces approved standards and regulations?

    <p>Natural gas flaring and venting</p> Signup and view all the answers

    Which type of license is required for midstream and downstream petroleum liquids operations?

    <p>Bulk petroleum liquids storage license</p> Signup and view all the answers

    Which type of license is required for the construction and operation of a facility for the production of petrochemicals?

    <p>License to construct and operate a facility for retail supply and distribution of petroleum products</p> Signup and view all the answers

    What is the purpose of the host communities development trust in the petroleum industry?

    <p>To manage the distribution of trust funds to host communities</p> Signup and view all the answers

    What is the main objective of the petroleum industry fiscal framework?

    <p>To establish pricing principles for petroleum products</p> Signup and view all the answers

    Under what circumstances can the Minister order a cutback of crude oil or condensate production?

    <p>During a national emergency</p> Signup and view all the answers

    What is the charge of hydrocarbon tax based on?

    <p>Crude oil revenue</p> Signup and view all the answers

    Which entity is responsible for the technical and commercial regulation of upstream petroleum operations?

    <p>The Nigerian Upstream Petroleum Regulatory Commission</p> Signup and view all the answers

    What are the objectives of the Nigerian Upstream Petroleum Regulatory Commission?

    <p>To implement government policies for upstream petroleum operations</p> Signup and view all the answers

    According to the Petroleum Industry Act, what is the objective of creating efficient and effective governing institutions in the petroleum industry?

    <p>To promote transparency and accountability</p> Signup and view all the answers

    What are the functions of the Commission in relation to upstream petroleum operations?

    <p>To enforce, administer, and implement laws, regulations, and policies</p> Signup and view all the answers

    What is the role of the Minister of Petroleum according to the Petroleum Industry Act?

    <p>All of the above</p> Signup and view all the answers

    According to the Petroleum Industry Act, who is the property and ownership of petroleum within Nigeria vested in?

    <p>The Government of the Federation of Nigeria</p> Signup and view all the answers

    What is one of the objectives of the Petroleum Industry Act in relation to local content practice?

    <p>To deepen local content practice in the oil and gas industry</p> Signup and view all the answers

    Which entity is responsible for the technical regulatory functions of the Nigerian petroleum industry?

    <p>The Nigerian Upstream Regulatory Commission</p> Signup and view all the answers

    Who is responsible for the appointment and removal of members of the Board of the Nigerian Upstream Regulatory Commission?

    <p>The President of Nigeria</p> Signup and view all the answers

    What is the main objective of the Nigerian Upstream Regulatory Commission?

    <p>To regulate the technical aspects of the petroleum industry</p> Signup and view all the answers

    Which of the following tax rates was in effect during the period of July 1974 to March 1974?

    <p>55%</p> Signup and view all the answers

    What was the royalty rate for offshore crude oil up to 100m water depth during the period of April 1977 to March 1974?

    <p>18.5%</p> Signup and view all the answers

    What was the royalty rate for offshore crude oil during the period of April 1975 to March 1974?

    <p>16.67%</p> Signup and view all the answers

    Which of the following is true about hydrocarbons with a high carbon to hydrogen ratio?

    <p>They are unsaturated</p> Signup and view all the answers

    Which of the following is NOT a characteristic of hydrocarbons with a low carbon to hydrogen ratio?

    <p>They have a pleasant odor</p> Signup and view all the answers

    Which of the following fiscal options does the PIA offer to investors?

    <p>Cost based incentives based on percentage of capital investments</p> Signup and view all the answers

    According to the Petroleum Industry Act, what is the royalty rate for shallow water oil production?

    <p>12%</p> Signup and view all the answers

    What is the production allowance for onshore shallow converted acreages under the Petroleum Industry Act?

    <p>NHT: 30%</p> Signup and view all the answers

    What is the royalty rate for deep offshore gas production under the Petroleum Industry Act?

    <p>8%</p> Signup and view all the answers

    What is the percentage of revenue for profit share to contractor under the Petroleum Industry Act?

    <p>16.5%</p> Signup and view all the answers

    According to the text, what was the rate of dividend WHT reduced to?

    <p>10%</p> Signup and view all the answers

    According to the text, what was the rate of CITA reduced to?

    <p>30%</p> Signup and view all the answers

    According to the text, what was the minimum royalty rate for offshore fields beyond 1000m water depth?

    <p>8%</p> Signup and view all the answers

    According to the text, what was the increasing rate of ITC for deepwater PSCs under the old fiscal regime?

    <p>50%</p> Signup and view all the answers

    According to the Petroleum Industry Act, what is the fiscal terms for new development investments based on?

    <p>A cost/price ratio of 45%</p> Signup and view all the answers

    What is the purpose of the Dual Tax and Royalty by Price system in the Petroleum Industry Act?

    <p>To increase the Saving Index</p> Signup and view all the answers

    What is the maximum cost capping ratio set by the Petroleum Industry Act for annual revenues?

    <p>65%</p> Signup and view all the answers

    What type of license is required for midstream and downstream gas operations according to the Petroleum Industry Act?

    <p>Gas Distribution License</p> Signup and view all the answers

    Which of the following fiscal tools is NOT mentioned in the text?

    <p>Investment Tax Allowances</p> Signup and view all the answers

    Which type of fiscal agreement allows an IOC to own equity?

    <p>Production Sharing Contract (PSC)</p> Signup and view all the answers

    What is the primary advantage of the Royalty/Tax regime compared to the PSC regime?

    <p>Higher % of resource can be booked</p> Signup and view all the answers

    Which entity is responsible for the technical and commercial regulation of upstream petroleum operations?

    <p>Nigerian Upstream Regulatory Commission</p> Signup and view all the answers

    Which of the following is NOT a key element of administration redefined in the Petroleum Industry Act?

    <p>Significant crude oil or gas discovery</p> Signup and view all the answers

    What is the duration of a Petroleum Exploration License?

    <p>3 years</p> Signup and view all the answers

    Which of the following is NOT a stage in the petroleum licensing regime?

    <p>Decommission &amp; Abandon</p> Signup and view all the answers

    What is the duration of a Petroleum Mining Lease?

    <p>15 years</p> Signup and view all the answers

    According to the Petroleum Industry Act, what is the key issue related to the administration of revoked producing leases?

    <p>Interim operator appointment within 30 days</p> Signup and view all the answers

    What is the period of service fee basis for the interim operator of revoked producing leases?

    <p>To be determined by the Commission</p> Signup and view all the answers

    What happens to the exploration cost of revoked producing leases?

    <p>Cost is not borne</p> Signup and view all the answers

    Under the Conversion Contract Regime, what happens to the fiscal incentives provided under PPTA?

    <p>They are terminated</p> Signup and view all the answers

    According to the text, how long is the duration of a Petroleum Prospecting License for onshore and shallow water areas?

    <p>6 years</p> Signup and view all the answers

    What is the duration of a Petroleum Exploration License?

    <p>3 years</p> Signup and view all the answers

    According to the text, how long is the duration of a Petroleum Mining Lease for all terrains?

    <p>20 years</p> Signup and view all the answers

    What is the duration of a Petroleum Prospecting License for deep offshore and frontier areas?

    <p>12 years</p> Signup and view all the answers

    Which of the following is a requirement for obtaining a Petroleum Prospecting License?

    <p>Drilling a minimum of one exploration well</p> Signup and view all the answers

    What is the duration of a Petroleum Mining Lease for all terrains?

    <p>20 years</p> Signup and view all the answers

    Which of the following is a condition for the grant of an appraisal for a significant gas discovery?

    <p>Request for appraisal must be submitted within one year of the discovery</p> Signup and view all the answers

    Under what circumstances can a Petroleum License be revoked?

    <p>All of the above</p> Signup and view all the answers

    According to the text, what is the funding mechanism for the Frontier Exploration Fund?

    <p>30% of NNPC Limited's profit oil and profit gas</p> Signup and view all the answers

    What is the objective of the Midstream and Downstream Gas Infrastructure Fund?

    <p>All of the above</p> Signup and view all the answers

    According to the text, what is the funding mechanism for the Midstream and Downstream Gas Infrastructure Fund?

    <p>0.5% of the wholesale price of petroleum products and natural gas sold in Nigeria</p> Signup and view all the answers

    What is the purpose of the Environmental Remediation Fund?

    <p>To rehabilitate or manage negative environmental impacts</p> Signup and view all the answers

    According to the text, which of the following is NOT an activity requiring a license in the midstream and downstream gas sector?

    <p>Retail trading of gas</p> Signup and view all the answers

    According to the text, which of the following is NOT an activity requiring a license in the midstream and downstream liquids sector?

    <p>Operation of a transportation network</p> Signup and view all the answers

    According to the text, which of the following is NOT a consideration for the Domestic Gas Delivery Obligation (DGDO) and Domestic Crude Supply Obligation (DCSO)?

    <p>No export projects for non-compliance</p> Signup and view all the answers

    According to the text, which of the following is NOT a principle for gas pricing under the Petroleum Industry Act?

    <p>Customer service codes</p> Signup and view all the answers

    Which organization is responsible for setting general industry policy direction and supervision on behalf of the government?

    <p>Minister of Petroleum</p> Signup and view all the answers

    What is the purpose of the NCDMB (Nigeria Content Development and Monitoring Board)?

    <p>Local content custodian</p> Signup and view all the answers

    Which of the following is NOT an element of institutional control in the petroleum industry?

    <p>Reporting relationships</p> Signup and view all the answers

    Which regulatory body is responsible for promoting investments and opportunities in the midstream and downstream sectors of the petroleum industry?

    <p>The Authority</p> Signup and view all the answers

    What is the composition of the Board of the Nigeria Upstream Petroleum Regulatory Commission?

    <p>3 Executives and 6 Non-Executives</p> Signup and view all the answers

    What is the funding mechanism for the Authority under the Petroleum Industry Act?

    <p>0.5% of the wholesale price of petroleum products sold in Nigeria</p> Signup and view all the answers

    What is the duration of a Petroleum Mining Lease for all terrains?

    <p>20 years</p> Signup and view all the answers

    Which agency is responsible for carrying out petroleum operations on a commercial basis, comparable to private companies in Nigeria?

    <p>NNPC Limited</p> Signup and view all the answers

    What is the primary objective of NNPC Limited as Federation Asset Manager?

    <p>To manage production sharing contracts for a fee</p> Signup and view all the answers

    What is the main purpose of the bicameral regulatory system across the oil and gas value chain?

    <p>To regulate technical and commercial aspects in a vertically integrated manner</p> Signup and view all the answers

    What is the significance of the change of nomenclature from 'Oil' to 'Petroleum' in the licensing name?

    <p>It signifies Nigeria's commitment to the exploration and production of both oil and gas resources</p> Signup and view all the answers

    Which of the following principles is NOT one of the guiding principles of the Petroleum Industry Act?

    <p>Transparency</p> Signup and view all the answers

    What is the purpose of the Petroleum Industry Act?

    <p>To promote crude oil exploration and production for the benefit of Nigerians</p> Signup and view all the answers

    Which activities does the Petroleum Industry Act apply to?

    <p>All activities within the oil and gas industry</p> Signup and view all the answers

    Which of the following actions can lead to the revocation of a license or interest in the petroleum industry?

    <p>Non-compliance with applicable laws, regulations and the conditions of the license</p> Signup and view all the answers

    What is the minimum percentage of relinquishment required for a New Petroleum Prospecting License and Petroleum Mining Lease after 10 years into its life?

    <p>50%</p> Signup and view all the answers

    Which of the following is NOT a requirement for obtaining a license or lease in the petroleum industry?

    <p>Minimum acreage</p> Signup and view all the answers

    What happens if the Minister does not act on the Commission's recommendation to award a license within 90 days?

    <p>The license is automatically awarded</p> Signup and view all the answers

    Which of the following is a requirement for the renewal of leases and licenses according to the text?

    <p>Payment of royalties, rents, taxes, and fees</p> Signup and view all the answers

    What is the time frame for submitting a field development plan for a marginal field?

    <p>Within three years of the effective date</p> Signup and view all the answers

    What is the consequence of failure to submit a field development plan for a marginal field within the specified time frame?

    <p>Relinquishment of the marginal field</p> Signup and view all the answers

    What is the purpose of unitization in the petroleum industry?

    <p>To ensure efficient production and maximize economic recovery</p> Signup and view all the answers

    According to the PIA, what is the timeframe for submitting an environmental management plan for upstream petroleum operations?

    <p>Within six months of the applicable License or Lease being granted</p> Signup and view all the answers

    Which regulatory body is responsible for managing and administering the midstream and downstream segments of the Nigerian oil and gas industry?

    <p>The Nigerian Midstream and Downstream Petroleum Regulatory Authority</p> Signup and view all the answers

    What is the purpose of the decommissioning and abandonment fund established by the PIA?

    <p>To cover the cost of decommissioning and abandonment activities</p> Signup and view all the answers

    What is the purpose of the Domestic Crude Supply Obligation (DCSO)?

    <p>To guarantee feedstock supply to local refineries</p> Signup and view all the answers

    What does the Authority require in order to establish third party access to transportation and distribution facilities?

    <p>Detailed rules developed by the Commission and Authority</p> Signup and view all the answers

    Under what circumstances may gas flaring be permitted according to the PIA?

    <p>All of the above</p> Signup and view all the answers

    What is the basis for determining the price of gas calculated by the domestic gas aggregator?

    <p>Prices determined by the Authority</p> Signup and view all the answers

    What is the purpose of the Domestic Gas Delivery Obligation (DGDO) under the PIA?

    <p>To promote gas development for domestic utilization</p> Signup and view all the answers

    Which fund is responsible for the development of frontier acreages in Nigeria?

    <p>Frontier Exploration Fund</p> Signup and view all the answers

    What is the funding mechanism for the Midstream and Downstream Gas Infrastructure Fund?

    <p>0.5% of the wholesale price of petroleum products and natural gas sold in Nigeria</p> Signup and view all the answers

    Who is responsible for overseeing the control and direction of the Frontier Exploration Fund?

    <p>NNPC Limited</p> Signup and view all the answers

    What is the objective of the Midstream and Downstream Gas Infrastructure Fund?

    <p>All of the above</p> Signup and view all the answers

    Which entity is responsible for the technical and commercial regulation of upstream petroleum operations in Nigeria?

    <p>Nigerian Upstream Regulatory Commission</p> Signup and view all the answers

    What are the three types of licenses/leases introduced by the Petroleum Industry Act (PIA) for upstream petroleum operations?

    <p>Petroleum Exploration License (PEL), Petroleum Prospecting License (PPL), Petroleum Mining Lease (PML)</p> Signup and view all the answers

    What is the duration of a Petroleum Prospecting License (PPL) for onshore and shallow water areas?

    <p>5 years with the prospect of renewal for an additional 5 years</p> Signup and view all the answers

    What is the minimum duration of a Petroleum Mining Lease (PML) for all terrains?

    <p>20 years</p> Signup and view all the answers

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