Module 6 Transcripts.docx

Slide No. Slide Title What is heard (voice-over and sound effects) On-Screen Text/ Illustrations Developer Notes SME NOTES 1 Module Objectives By the end of this section, participants will be able to list out the miscellaneous provisions and outline their scope. List out the miscellaneous provisions...

Slide No. Slide Title What is heard (voice-over and sound effects) On-Screen Text/ Illustrations Developer Notes SME NOTES 1 Module Objectives By the end of this section, participants will be able to list out the miscellaneous provisions and outline their scope. List out the miscellaneous provisions and outline their scope. Visual description or sketch: Make sure the words on the screen sync with the audio. OST: All text in yellow should be on the screen and be animated to appear one after the other Audio: All text Replace the word “delineate” with “outline” as a better synonym. 2 Outline We will take a look at the following: Miscellaneous provisions of the PIA and The 8 Schedules Miscellaneous provisions Schedules Visual description or sketch: Make sure the words on the screen sync with the audio. OST: All text in yellow should be on the screen and be animated to appear one after the other Audio: All text Miscellaneous provisions 3 Overview This module covers the miscellaneous provisions of the PIA. They include: Legal Proceedings Pre-action Notice Consequential Amendments Repeals Saving Provisions Vesting &Transfer of subsurface Assets and Liability to the Commission Transfer of Employees and Conditions of Service Movement of Staff of the Institutions Skills Gap Analysis Transfer of Existing Host Communities Development Projects and Host Communities Development Schemes. Transitional and Savings Provisions. Click on each to learn more Legal Proceedings Pre-action Notice Consequential Amendments Repeals Saving Provisions Vesting &Transfer of subsurface Assets and Liability to the Commission Transfer of Employees and Conditions of Service Movement of Staff of the Institutions Skills Gap Analysis Transfer of Existing Host Communities Development Projects and Host Communities Development Schemes. Transitional and Savings Provisions. Click on each to learn more Visual description or sketch: Make sure the words on the screen sync with the audio. OST: All text in yellow should be on the screen and be animated to appear one after the other All red text in highlighted yellow should be represented in images and text Audio: All text 4 Legal Proceedings The Public Officers Protection Act applies to any action against the Commission or Authority, its Chief Executives, or any commissioner, director, officer, or employee. Action, claim or proceedings against the Commission, the Authority or their employees must be taken within three months after the accrual of any cause of action, provided that action or omission was not done in good faith The Commission and Authority, its officers and employees are covered under the Public Officers Protection Act. No action, claim or suit shall be commenced against the Commission or the Authority and their employees for any act done or omitted, unless it is commenced within three months after the accrual of any cause of action in respect of any such act or neglect and provided such an act or omission was not done in good faith Visual description or sketch: Make sure the words on the screen sync with the audio. OST: All text in yellow should be on the screen and be animated to appear one after the other All red text in highlighted yellow should be represented in images and text Audio: All text 5 Pre-action Notice. A suit shall not be instituted against the Commission or Authority, or any officer of the Commission or Authority. However, a written notice of intent to initiate the suit must be served on the Commission or the Authority on month in advance. A notice must state the cause of action, the particulars of the claim, the claimant’s name and address, and the relief sought. A notice, summons, or other document required or authorized to be served on the Commission or Authority under this Act or any other law or enactment may be served by delivering it to the Commission or Authority Chief Executive’s office. An order for execution or attachment of any property of the Commission or Authority shall be issued only after the Commission or Authority has been given three months’ notice of the intention to begin the execution process. A suit may be instituted against the Commission or Authority or any of its officers only after a month’s written notice of the intent to sue has been served to them. A notice must state the cause of action, claim details, claimant’s name and address, and the relief sought. Notices, summons, or other documents to the Commission or Authority may be served by delivering them to the offices of the Commission or Authority. The Commission or Authority may be issued an order for execution or attachment of any property only after three months’ notice of the intention to begin the execution process has been given. Visual description or sketch: Make sure the words on the screen sync with the audio. OST: All text in yellow should be on the screen and be animated to appear one after the other All red text in highlighted yellow should be represented in images and text Audio: All text 6 Consequential Amendments Where the provisions of any other enactment or law, other than the Nigeria Oil and Gas Industry Content Development Act, are inconsistent with the provisions of this Act, the provisions of this Act shall take precedence over those provisions to the extent of the inconsistencies. The PIA is to prevail over other enactments or acts that are inconsistent with the its provisions, except the Nigeria Oil and Gas Industry Content Development Act. “The sentence must be completed with the “Content Development Act” in the on-screen text so as not to change the meaning. 7 Repeals The following are Acts and Regulations are to be repealed following the PIA enactment: Associated Gas Reinjection Act, 1979, Cap. A25, Laws of the Federation of Nigeria, 2004, and its Amendments Hydrocarbon Oil Refineries Act No. 17 of 1965, Cap. H5, Laws of the Federation of Nigeria, 2004 ; Motor Spirits (Returns) Act, Cap. M20, Laws of the Federation of Nigeria, 2004 ; Nigerian National Petroleum Corporation (Projects) Act No. 94 of 1993, Cap. N124, Laws of the Federation of Nigeria, 2004 ; Nigerian National Petroleum Corporation Act (NNPC) 1977 No. 33, Cap. N123, Laws of the Federation of Nigeria as amended, when NNPC ceases to exist under section 54 (3) of this Act ; Petroleum Products Pricing Regulatory Agency (Establishment) Act No. 8, 2003 ; The Petroleum Profit Tax Act, Cap. P13, LFN, 2004, upon conversion of an oil prospecting license or oil mining lease, provided that the repeal would apply to any new acreage granted under this Act as of the effective date. The Deep Offshore and Inland Basin Production Sharing Contract Act, 2019, as amended, upon conversion of an oil prospecting license or oil mining lease - provided that the repeal would apply to any new acreage granted under this Act as of the effective date. Prior to the enactment of the PIA, the Petroleum Equalisaton Fund was responsible for reimbursing oil marketing companies for their defined operating costs, which should ordinarily have been transferred to their customers, via increments in pump prices, and which would have seen petroleum products retailing at different prices above the regulated prices in different locations, across the nation. Some responsibilities of the Petroleum Equalisation Fund were transferred to the Nigerian Midstream and Downstream Authority after the enactment of the PIA. However, with respect to Petroleum Equalisation Fund after the enactment of the PIA, the Authority will cease to: Collect surplus revenues from oil marketing companies except for surplus revenues due to be paid by these marketing companies prior to the enactment date; and Reimburse oil marketing companies except for remaining payment obligations incurred prior to the enactment date. Excess funds in the Petroleum Equalisation Fund will be transferred to the Midstream and Downstream Gas Infrastructure Fund. Repealed Acts Associated Gas Re-Injection Act Hydrocarbon Oil Refineries Act Motor Spirits (Returns) Act Nigerian National Petroleum Corporation (Projects) Act Nigerian National Petroleum (NNPC) Act Petroleum Products Pricing Regulatory Agency (Establishment) Act The Petroleum Profit Tax Act, Cap. P13, LFN, 2004, upon conversion of an oil prospecting license or oil mining lease The Deep Offshore and Inland Basin Production Sharing Contract Act, 2019, as amended, upon conversion of an oil prospecting license or oil mining lease With respect to the functions of the Petroleum Equalisation Fund transferred to the Authority, Collection of net surplus revenues from oil marketing companies shall cease, except for those earned prior to the date of enactment. Payments for reimbursements to oil marketing companies shall cease, except for those incurred prior to the date of enactment. Excess funds in the Petroleum Equalisation Fund will be transferred to the Midstream and Downstream Gas Infrastructure Fund. Visual description or sketch: Make sure the words on the screen sync with the audio. OST: All text in yellow should be on the screen and be animated to appear one after the other All red text in highlighted yellow should be represented in images and text Audio: All text Petroleum Equalization Fund’s function has been taken over by the Authority 8 Saving Provisions. The savings provisions provides guidelines for non-converted and converted licenses or leases, as well as those licenses or leases which do not wish to convert. For non-converted license or lease, the subsisting Oil Mining Lease or Oil Prospecting License under current terms shall continue subject to the following conditions: Production Sharing Contracts (PSCs) that were signed by the defunct NNPC shall continue to have NNPC Limited as the concessionaire. Renewed leases and renegotiated production sharing contracts cannot include investment tax credits and must include a cost oil limit of no more than 60% of total oil production, a minimum 55% haircut on disputed amount, and production from the total production of all production areas. Shall be subject to Contracts and leases, wherein the conversion date shall be the date of signing of such renegotiated production sharing contracts, and The leases and renegotiate production sharing contracts may only be renewed in accordance with the provisions of this Act upon expiration or termination. While for conversion of licenses and leases: Any oil prospecting license and oil mining lease that is being converted shall be converted under the conversion process outlined in the Act as discussed in Module 3 of this Program. For Licenses and leases that do not wish to convert: The domestic gas price, which is the applicable gas price established before the effective date of this Act, shall apply, except for the royalty, which shall be 0% per field for five years from the date of commencement of field production, including all relevant accounting period before the effective date. Any other license, lease, certificate, permit, or other right granted by the Department of Petroleum Resources, Petroleum Pricing and Product Regulatory Agency, or Petroleum Equalisation Fund, as the case may be, and still in force on the effective date, shall continue in force for the remainder of its term as if issued under this Act. Any tariff, price, levy, or surcharge that was payable to the Department of Petroleum Resources, Petroleum Products Pricing and Regulatory Agency, or Petroleum Equalisation Fund before the effective date shall remain in force until the term of the said tariff, price, levy, or surcharge expires, or until alternative provisions are made under this Act or any regulations made under it, whichever comes first. On the advice of the Commission or Authority, the Minister of Petroleum may make any additional transitional and savings provisions that are necessary or desirable, provided that such provisions are consistent with the Act's transitional and savings provisions. Parties to gas sales agreements related to domestic sales or exports entered into prior to the effective date are entitled to continue such agreements unaltered until the termination of such agreements, provided, however, that such agreements are submitted to the Authority and the Commission for review and possible amendments in accordance with the Act. Non -Conversion The subsisting OML/OPLs under current terms shall continue subject to the following conditions: Negotiated PSCs shall continue to have NNPC Limited as concessionaire No investment tax credits A cost oil limit of not more than 60% of the total oil production A minimum of 55% haircut on disputed amount Renewed leases and renegotiated production sharing contracts Renegotiated production sharing contracts must be subject to section 93 of the Act. Leases and production sharing contracts can only be renewed under the provisions of the Act. Conversion Any oil prospecting license and oil mining lease that is being converted shall be converted based on the guidelines stated in the Act. Licenses and leases that do not wish to convert The domestic gas price shall apply, except for the royalty, which shall be 0% per field for five years field production commencement date. Other Considerations Any other license, lease, certificate, permit, or other right granted by previous authorities shall continue in force for the remainder of its term as if issued under this Act. Any tariff, price, levy, or surcharge that was payable to the previous authorities shall remain in force until its term expires or until alternative provisions are made under this Act or its regulations The Minister of Petroleum may make any additional transitional and savings provisions on the advice of the Commission or Authority. Gas sales agreements entered into before the effective date may continue unaltered until terminated, provided they are submitted and reviewed by the Authority and the Commission. Visual description or sketch: Make sure the words on the screen sync with the audio. OST: All text in yellow should be on the screen and be animated to appear one after the other All red text in highlighted yellow should be represented in images and text Audio: All text “shall continue” to be deleted as it does not fit into the statement. 9 Vesting &Transfer of Subsurface Assets and Liability to the Commission Commission The Commission shall be vested with all assets, funds, resources and other movable and immovable properties which were held by the relevant sections of the Petroleum Inspectorate or the Department of Petroleum Resources. The rights, interests, obligations, and liabilities of the relevant sections of the Petroleum Inspectorate and Department of Petroleum Resources that existed immediately before the enactment date under any contract, instrument, law, or equity are assigned to and vested in the Commission and are enforceable as fully and effectively as if the Commission had been a party thereto. Authority On the other hand, the Authority shall be vested with all assets, funds, resources and other movable and immovable properties, which were held by the Petroleum Pricing and Product Regulatory Agency, the Petroleum Equalisation Fund (Management Board) and the relevant sections of the Department of Petroleum Resources. Similarly, the rights, interests, obligations, and liabilities of the Petroleum Pricing and Product Regulatory Agency, the Petroleum Equalisation Fund (Management Board) and the relevant sections of the Department of Petroleum Resources, that existed before the enactment date under any contract, instrument, law, or equity are assigned to and vested in the Authority and are enforceable as fully and effectively as if the Authority had been a party thereto. Section 312 The Commission is vested with Assets, Funds, Resources, Other movable and immovable properties held by the relevant sections of the Petroleum Inspectorate or The Department of Petroleum Resources. The rights, interests, obligations, liabilities, contract, instrument, law, or equity of the relevant sections of the Petroleum Inspectorate and Department of Petroleum Resources are vested upon and enforceable by the Commission. The Authority is vested with Assets, Funds, Resources, Other movable and immovable properties of the Petroleum Pricing and Product Regulatory Agency, Petroleum Equalisation Fund (Management Board) and relevant sections of the Department of Petroleum Resources The rights, interests, obligations, liabilities, contract, instrument, law, or equity of the PPPRA, PEF and relevant sections in DPR are vested in and enforceable by the Authority. Visual description or sketch: Make sure the words on the screen sync with the audio. OST: All text in yellow should be on the screen and be animated to appear one after the other All red text in highlighted yellow should be represented in images and text Audio: All text There is need for very good animation to capture the transfer of assets. 10 Transfer of Employees and Conditions of Service Employees in the relevant divisions of the Petroleum Inspectorate or the Department of Petroleum Resources shall become employees of the Commission on terms no less favorable than those in effect immediately before the transfer, and all years of service with them shall be deemed to qualify for employment-related benefits, including pension schemes and other statutory obligations. Similarly, employees in the relevant divisions of the Department of Petroleum Resources, the Petroleum Pricing and Product Regulatory Agency, and the Petroleum Equalisation Fund shall be employees of the Authority on terms no less favorable than those in effect immediately before the transfer. All years of service with them shall be deemed to qualify for employment-related benefits, including pension schemes and other statutory obligations. Employees in the relevant divisions of the Petroleum Inspectorate or DPR shall become employees of the Commission on no less favourable terms and qualify for employment-related benefits. Employees in the relevant divisions of the DPR, the PPPRA, and the PEF shall be employees of the Authority on no less favourable terms and qualify for employment-related benefits. Visual description or sketch: Make sure the words on the screen sync with the audio. OST: All text in yellow should be on the screen and be animated to appear one after the other All red text in highlighted yellow should be represented in images and text Audio: All text There is need for very good animation to capture the transfer of employees. 11 Movement of Staff of the Institutions Within 24 months of the effective date, the Minister may transfer any staff of the institutions listed below to the Commission, the Authority, or NNPC Limited, if the skills and competence of the said staff are most appropriate in any of the successor institutions during the implementation process. The Department of Petroleum Resources; The Nigerian National Petroleum Corporation and any of its subsidiaries; The Petroleum Equalisation Fund; and The Petroleum Inspectorate and Petroleum Products Pricing and Regulatory Authority. The Minister may cause an inter-agency transfer of any staff if the skills and competence of the said staff are most appropriate in any of the successor institutions. Applicable Institutions Department of Petroleum Resources Nigerian National Petroleum Corporation and any of its subsidiaries Petroleum Equalisation Fund Petroleum Inspectorate and Petroleum Products Pricing and Regulatory Authority. Visual description or sketch: Make sure the words on the screen sync with the audio. OST: All text in yellow should be on the screen and be animated to appear one after the other All red text in highlighted yellow should be represented in images and text Audio: All text Movement of staff is achieved through skills gap analysis. There may be no need to mention it in the title of the slide. 12 Transfer of Existing Host Communities Development Projects and Host Communities Development Schemes. Every settlor shall transfer any existing host community development project or scheme under its corporate social responsibility, memorandum of understanding, or any other agreement to a host communities development trust established under this Act. Any financial contribution made by a settlor to any ongoing host community development project or scheme within 12 months from the date of enactment will be regarded as a contribution Every settlor must transfer any existing host community development project or scheme to a host community development trust established under this Act. Financial contributions made by a settlor to any ongoing host communities development project for 12 months from the effective date shall be deemed to constitute a contribution by such holder. Visual description or sketch: Make sure the words on the screen sync with the audio. OST: All text in yellow should be on the screen and be animated to appear one after the other All red text in highlighted yellow should be represented in images and text Audio: All text 13 Transitional and Savings Provisions. All subsidiary legislation made under the Petroleum Act, the Petroleum Profits Tax Act, and the Deep Offshore and Inland Basin Production Sharing Contract Act shall continue to have effect as if made under the corresponding provisions of this Act. Any capital allowances existing at the effective date for the related oil mining leases shall be carried over to the selected petroleum mining leases if they relate to upstream petroleum operations and do not include investment tax allowances and investment tax credits. Subsidiary legislation made under the Petroleum Act, Petroleum Profits Tax Act, and Deep Offshore and Inland Basin Production Sharing Contract Act will continue to have an effect. Any capital allowances existing at the effective date for the related OML shall be carried over if they relate to upstream petroleum operations and do not include investment tax allowances and credits. Visual description or sketch: Make sure the words on the screen sync with the audio. OST: All text in yellow should be on the screen and be animated to appear one after the other All red text in highlighted yellow should be represented in images and text Audio: All text The title of the slide should be simple. Schedules 1 Objective By the end of this section, participants will be able to interpret and summarise the Eight (8) Schedules in the PIA. interpret and summarise the Eight (8) Schedules in the PIA. 2 Outline The Act contains eight(8) schedules which deals respectively with; Rights of Pre-Emption Principles of Negotiating Incorporated Joint Ventures Domestic Base Price and Allocation & Pricing of Domestic Delivery Obligation Pricing Formula for Gas Price for the Gas Based Industries Capital Allowances Production Allowances and Cost Price Ratio Limit Petroleum Fees, Rents and Royalty Creation of the Ministry of Petroleum Incorporated Rights of Pre-Emption Principles of Negotiating Incorporated Joint Ventures Domestic Base Price and Allocation & Pricing of Domestic Delivery Obligation Pricing Formula for Gas Price for the Gas Based Industries Capital Allowances Production Allowances and Cost Price Ratio Limit Petroleum Fees, Rents and Royalty Creation of the Ministry of Petroleum Incorporated Visual description or sketch: Make sure the words on the screen sync with the audio. OST: All text in yellow should be on the screen and be animated to appear one after the other All red text in highlighted yellow should be represented in images and text Audio: All text 3 First schedule Second schedule Third Schedule Fourth schedule Fifth schedule Sixth schedule Seventh schedule Eighth schedule Click each to learn more 4 First schedule The first schedule gives details of the Rights of Pre-Emption According to this provision, the licensee or lessee must increase the supply of petroleum or petroleum products or both for the Federal Government to the extent required by the Minister. They must also deliver all purchases under the right of preemption in such quantities and at such places as may be determined by the Minister and pay the amount due for demurrage according to the terms of the charter party or the loading rates previously agreed to. When the Minister exercises the right of preemption, the price to be paid for petroleum or petroleum-derived products shall be: (a) The fair worth at the time of delivery less a discount that both parties must agree upon; (b) In the absence of such an agreement, a reasonable price at the port of delivery is to be decided by agreement between the Minister and the licensee or lessee, or by arbitration in the absence of such an agreement. Arbitration must occur after the delivery of petroleum or petroleum products. Click here to see the major paragraphs in the First Schedule The Rights of Pre-Emption The licensee or lessee must increase the supply of petroleum or petroleum products Deliver all purchases under the right of preemption in such quantities and at such places as may be determined by the Minister The price to be paid for petroleum or petroleum-derived products shall be: (a) The fair worth at the time of delivery less a discount that both parties must agree upon; (b) A reasonable price at the port of delivery is to be decided by agreement between the Minister and the licensee or lessee, or arbitration in the absence of such an agreement. Arbitration must occur after the delivery of petroleum or petroleum products Click here to see the major paragraphs in the First Schedule Schedules Sections Paragraphs Schedule 1 Section 3 (3) Paragraph 1-7 Rights of Pre-Emption Visual description or sketch: Make sure the words on the screen sync with the audio. OST: All text in yellow should be on the screen and be animated to appear one after the other All red text in highlighted yellow should be represented in images and text Audio: All text 5 Second schedule The Second schedule gives details of the Principles of Negotiating Incorporated Joint Ventures. An INC may be created for an existing joint operating agreement, and NNPC Limited may enter into negotiations with the other parties to such existing joint operating agreements. Before the incorporation of each IJVC, the parties to each applicable joint operating agreement shall continue to carry out their obligations under such joint operating agreement. The parties shall own each INC to the joint operating agreement in the same proportion as their existing participating interests or in such other proportion as the parties mutually agree. This schedule interprets the provisions concerning the following: General Provision Special Provisions Relating to Incorporated Joint Venture Companies Organisation of Incorporated Joint Venture Companies. Special provisions relating to the shares of Incorporated Joint Venture Companies Special provisions relating to rents, royalties, taxes and other levies payable by an IJVC Special right of shareholders in an Incorporated Joint Venture Company to purchase petroleum and any petroleum derivatives Pro-rata Dividend Distribution Dividend Policy Special Provisions Relating to Financing of Operations Click here to see the major paragraphs in the Second Schedule The Principles of Negotiating Incorporated Joint Ventures An INC may be created for an existing joint operating agreement, and NNPC Limited may enter into negotiations with the other parties to such existing joint operating agreements. Click here to see the major paragraphs in the Second Schedule Schedules Sections Paragraphs Schedule 2 Sections 54 (7) and 65 (1) Paragraph 1 General Provision Paragraph 2 Special Provisions Relating to Incorporated Joint Venture Companies Paragraph 3 Organisation of Incorporated Joint Venture Companies. Paragraph 4 Special provisions relating to the shares of Incorporated Joint Venture Companies Paragraph 5 Special provisions relating to rents, royalties, taxes and other levies payable by an IJVC Paragraph 6 Special right of shareholders in an Incorporated Joint Venture Company to purchase petroleum and any petroleum derivatives Paragraph 7 Pro-rata Dividend Distribution Paragraph 8 Dividend Policy Paragraph 9 Special Provisions Relating to Financing of Operations Visual description or sketch: Make sure the words on the screen sync with the audio. OST: All text in yellow should be on the screen and be animated to appear one after the other All red text in highlighted yellow should be represented in images and text Audio: All text 6 Third schedule The Third schedule gives details of the Domestic Base Price and Allocation & Pricing of Domestic Delivery Obligation. According to the third schedule, the Authority is required to consider the following factors when determining the domestic base price: The price must be high enough to encourage voluntary gas production to satisfy domestic demand. Unless the first requirement is met, the price shall not be higher than the average of comparable natural gas prices in significant emerging nations that are significant natural gas producers, as determined by the Authority. Each year, the price will be adjusted to account for inflation. The Authority shall determine the domestic base price in accordance with regulations within three months of the commencement date of the Act and shall revise the domestic base price as necessary to reflect changes in the domestic market. Click here to see the major paragraphs in the third schedule The Domestic Base Price and Allocation & Pricing of Domestic Delivery Obligation. The price must be high enough to encourage voluntary gas production to satisfy domestic demand. Unless the first requirement is met, the price must not exceed the average of comparable natural gas prices in emerging nations. The Authority shall determine the domestic base price and revise it as necessary to reflect changes in the domestic market. Click here to see the major paragraphs in the third schedule Schedules Sections Paragraphs Schedule 3 Sections 167 (1) and 318 Paragraph 1 Domestic Base Price for Gas Paragraph 2 Allocation and Pricing of the Domestic Delivery Obligation Visual description or sketch: Make sure the words on the screen sync with the audio. OST: All text in yellow should be on the screen and be animated to appear one after the other All red text in highlighted yellow should be represented in images and text Audio: All text 7 Fourth schedule The Fourth schedule gives details of the Pricing Formula for Prices for the Gas Based Industries The following price formula determines the gas price for the gas-based industries CP - NRP *(I + EPF) < EPP Where- CP is the Cost Price which is the applicable price in US dollar per Metric Million British Thermal Unit (US $/MMBtu) EPP is the End Product Price which is the domestic base price under section 168 (3) NRP is the National Reference Price which is US $1/MMBtu EPF is the End Product Factor which is described by the following formula (CMPP - PRP)/ PRP CMPP is the Average Current Month End Product Price in US dollar per metric tonne (US $/MT) PRP = Product Reference Price in US $/MT i.e. dollar per metric tonne This varies depending on the industry If the situation warrants it, the Authority may establish new values for one or more gas-based businesses and adjust the formulas or values for NRP, CMPP, and PRP through regulation. Click here to see the major paragraphs in the fourth schedule The Pricing Formula for Gas Price for the Gas Based Industries The following price formula determines the gas price for the gas based industries CP - NRP *(I + EPF) < EPP Where- CP is the applicable price in US $/MMBtu, EPP is the End Product Price which is the domestic base price under section 168 (3) NRP is the National Reference Price which is US $1/MMBtu EPF is the End Product Factor which is described by the following formula (CMPP - PRP)/ PRP CMPP is the Average Current Month End Product Price in US $/MT PRP = Product Reference Price in US $/MT i.e. dollar per metric tonne Which varies depending on the industry If the situation warrants it, the Authority may establish new values for one or more gas-based businesses and adjust the formulas or values for NRP, CMPP, and PRP through regulation. Click here to see the major paragraphs in the fourth schedule Schedule Sections Paragraphs Schedule 4 Section 168 (1) and (4) Paragraph 1 Pricing formula for gas price for the gas-based Industries Visual description or sketch: Make sure the words on the screen sync with the audio. OST: All text in yellow should be on the screen and be animated to appear one after the other All red text in highlighted yellow should be represented in images and text Audio: All text 8 Fifth schedule The Fifth schedule gives details of the Capital Allowances This schedule explains that Qualifying expenditure must relate to upstream petroleum operations and must not have benefited from Capital Allowances before the acquisition of the asset by another entity. Any loss suffered on assets disposed of before a company's first accounting period would be disallowed. Any profit realised on disposal would be liable to capital gains tax. This schedule interprets the provisions concerning the following: Capital Allowances Provisions relating to pre-production expenditure Owner and meaning of relevant interest Sale of Buildings Annual Allowance Balancing allowances Balancing charges Residue Meaning of “disposed of ” Value of an asset or interest in a petroleum prospecting licence or petroleum mining lease Apportionment Part of an asset Exclusion of certain expenditure Asset used or expenditure incurred partly for the purpose of petroleum operations Disposal without change of ownership Capital allowance rates Asset in use Click here to see the major paragraphs in the fifth schedule The Capital Allowances Qualifying expenditure must relate to upstream petroleum operations and must not have benefited from Capital Allowances before the acquisition of the asset by another entity Click here to see the major paragraphs in the fifth schedule Schedule Sections Paragraphs Schedule 5 Sections 263 (1) (d), 266 (1) (a) Paragraph 1 Capital Allowances and 270, 271 (2) (b) Paragraph 2 Provisions relating to pre-production expenditure and (c),277 (1) (c) 280 Paragraph 3 Owner and meaning of relevant interest and (1) (b) and 302 (10) (a) Paragraph 4 Sale of Buildings Paragraph 5 and 6 Annual Allowance Paragraph 7 Balancing allowances Paragraph 8 Balancing charges Paragraph 9 Residue Paragraph 10 Meaning of “disposed of ” Paragraph 11 Value of an asset or interest in a petroleum prospecting licence or petroleum mining lease Paragraph 12 Apportionment Paragraph 13 Part of an asset Paragraph 14 Exclusion of certain expenditure Paragraph 15 Asset used or expenditure incurred partly for the purpose of petroleum operations Paragraph 16 Disposal without change of ownership Paragraph 17 Capital allowance rates Paragraph 18 Asset in use Visual description or sketch: Make sure the words on the screen sync with the audio. OST: All text in yellow should be on the screen and be animated to appear one after the other All red text in highlighted yellow should be represented in images and text Audio: All text All tables should be well designed to communicate meanings in simple term. All tables should be well designed to communicate meanings in simple term. 9 Sixth schedule The Sixth schedule gives details of Production Allowances and Cost Price Ratio Limit The provision of this schedule states that the production allowance for crude oil production by converted oil mining leases based on a conversion contract and renewals shall be lower than US $2.50 per barrel and 20% of the fiscal oil price. The detailed procedures for determining the production allowances shall be established in the regulations. Any allowances for crude oil shall also apply to condensates and liquid natural gas liquids. Also, it states that all costs prescribed under the hydrocarbon tax must be subject to the cost-price ratio limit of 65% of gross revenues determined at the measurement points. Click here to see the major paragraphs in the sixth schedule The Production Allowances and Cost Price Ratio Limit The production allowance for crude oil production by converted oil mining leases based on a conversion contract and renewals shall be lower than US $2.50 per barrel and 20% of the fiscal oil price Click here to see the major paragraphs in the sixth schedule Schedule Sections Paragraphs Schedule 6 Sections 264 (q), 266 (1) (b) and (2),277 (1) (d) and 280 (1) Paragraph 1 Production Allowance Paragraph 2 Cost Price Ratio (CPR) Limit Visual description or sketch: Make sure the words on the screen sync with the audio. OST: All text in yellow should be on the screen and be animated to appear one after the other All red text in highlighted yellow should be represented in images and text Audio: All text All tables should be well designed to communicate meanings in simple term. 10 Seventh schedule The Seventh schedule gives details of Petroleum Fees, Rents and Royalty This schedule states that the Commission shall publish rates or fees payable for applications for a petroleum exploration license, renewal of a mining lease, assign an interest or sublet a license, terminate or effect a partial or full surrender of a license, permit to operate a drilling rig, grant of field development plan approval, and approval of the drilling of a well. Petroleum production must be subject to royalties on a non-discriminatory basis, with condensates treated as crude oil and natural gas liquids treated as natural gas. This schedule interprets the provisions concerning the following: Fees payable for licenses and leases Rents for Licenses Payment of fees before grant of license or lease Penalty for default in payment of rent Verification and payment account All Petroleum production subject to Royalties Measurement Point for the determination of production volumes Determination of price for royalty Royalties in kind or cash Royalties based on production Royalty by price Penalty for non-payment and outstanding payments of royalties and enforcement of payment Revocation, Seizure and Sistrain Production Sharing, Profit Sharing and Risk Service Contracts Click here to see the major paragraphs in the seventh schedule The Petroleum Fees, Rents and Royalty The Commission shall publish rates or fees payable for applications Click here to see the major paragraphs in the seventh schedule Schedule Sections Paragraphs Schedule 7 Section 268 (3),303 (1), 306 and 318 Paragraph 1 Fees payable for licences and leases Paragraph 2 Rents for Licences Paragraph 3 Payment of fees before grant of licence or lease Paragraph 4 Penalty for default in payment of rent Paragraph 5 Verification and payment account Paragraph 6 All Petroleum production subject to Royalties Paragraph 7 Measurement Point for the determination of production volumes Paragraph 8 Determination of price for royalty Paragraph 9 Royalties in kind or cash Paragraph 10 Royalties based on production Paragraph 11 Royalty by price Paragraph 12 Penalty for non-payment and outstanding payments of royalties and enforcement of payment Paragraph 13 Revocation, Seizure and Sistrain Paragraph 14 Production Sharing, Profit Sharing and Risk Service Contracts Visual description or sketch: Make sure the words on the screen sync with the audio. OST: All text in yellow should be on the screen and be animated to appear one after the other All red text in highlighted yellow should be represented in images and text Audio: All text 11 Eighth schedule The Eighth schedule gives details of the Creation of the Ministry of Petroleum Incorporated. The Ministry of Petroleum Incorporated is established as a sole corporation. However, that clause stipulates that: Ownership of all shares in NNPC Limited shall be vested in the Government at incorporation and held by the Ministries of Finance Incorporated and of Petroleum Incorporated in equal amounts on behalf of the Government, and the Ministries of Finance Incorporated and of Petroleum Incorporated are incorporated under the requirements of this schedule. Click here to see the major paragraphs in the eighth schedule The Creation of the Ministry of Petroleum Incorporated The Ministry of Petroleum Incorporated is established as a sole corporation. This is in accordance with section 53(3) of the PIA. Click here to see the major paragraphs in the eighth schedule Schedules Sections Paragraphs Schedule 8 Section 53 (3) Paragraph 1 Creation of the Ministry of Petroleum Incorporated Visual description or sketch: Make sure the words on the screen sync with the audio. OST: All text in yellow should be on the screen and be animated to appear one after the other All red text in highlighted yellow should be represented in images and text Audio: All text 12 Summary We have now come to the end of this module. Before we proceed, let’s remind ourselves of the key learning points- The Act contains eight(8) schedules as follows: The First Schedule deals with the Rights of Pre-Emption The Second Schedule deals with Principles of Negotiating Incorporated Joint Ventures The Third Schedule deals with Domestic Base Price and Allocation & Pricing of Domestic Delivery Obligation The Fourth Schedule deals with the Pricing Formula for Gas Prices for the Gas Based Industries The Fifth Schedule deals with Capital Allowances The Sixth Schedule deals with Production Allowances and Cost Price Ratio Limit Seventh Schedule deals with Petroleum Fees, Rents and Royalty Eight Schedule deals with Petroleum Fees, Rents and Royalty SCHEDULES SUBJECT MATTER First Schedule Rights of Pre-Emption Second Schedule Principles of Negotiating Incorporated Joint Ventures Third Schedule Domestic Base Price and Allocation & Pricing of Domestic Delivery Obligation Fourth Schedule Pricing Formula for Gas Price for the Gas-Based Industries Fifth Schedule Capital Allowances Sixth Schedule Production Allowances and Cost Price Ratio Limit Seventh Schedule Petroleum Fees, Rents and Royalty Eight Schedule Creation of the Ministry of Petroleum Incorporated Visual description or sketch: Make sure the words on the screen sync with the audio. OST: All text in yellow should be on the screen and be animated to appear one after the other All red text in highlighted yellow should be represented in images and text Audio: All text 17 End of Module Well done! You have come to the end of the module. Well done! Proceed to the assessment. Click "Begin" to start the Progress Test. 18 Closing slide Well done! You have come to the end of the PIA Immersion Course. We trust this has been an exciting learning experience for you.. Well done! This is the last module. There should be information on how to download attendance certificate.