Petroleum Industry Act 2021 PDF

Petroleum Industry Act, 2021 A 316 2021 No. 6 Fiscal stabilisation. 305. Fiscal stabilisation clauses contained in any production sharing contract or other contract entered into after the commencement of this Act shall not be applicable to the fiscal provisions listed in this section, regardless...

Petroleum Industry Act, 2021 A 316 2021 No. 6 Fiscal stabilisation. 305. Fiscal stabilisation clauses contained in any production sharing contract or other contract entered into after the commencement of this Act shall not be applicable to the fiscal provisions listed in this section, regardless of whether these changes affect the contractor favorably or unfavorably, if changes are being made in a manner that is not discriminatory to the petroleum industry or the contractor and the respective fiscal provisions are— (a) generally applicable taxes, such as withholding taxes, companies income tax, tertiary education tax and VAT ; (b) levies, taxes or payments to comply with modern principles in respect of environment, labour laws, health and safety ; and (c) new taxes, levies or duties to implement Nigeria’s commitments with respect to climate change under the United Nations Framework Convention on Climate Change and other related international agreements. Royalty. Seventh Schedule. 306. All production of petroleum, including production tests shall be subject to royalties as provided in the Seventh Schedule to this Act. CHAPTER 5—MISCELLANEOUS PROVISIONS Legal proceedings. Cap. P41, LFN, 2004. 307.—(1) The provisions of the Public Officers Protection Act shall apply in relation to any suit instituted against the Commission or the Authority, the Commission Chief Executive or the Authority Chief Executive, any commissioner or director, officer or employee of the Commission or Authority. (2) No action, claim, proceeding or suit shall lie or be commenced against the Commission or the Authority, the Commission Chief Executive or Authority Chief Executive, any commissioner or director or any other employee or officer of the Commission or Authority, for any act done, attempted to be done or omitted to be done under this Act or any other law or enactment or of any public duty or authority in respect of any alleged neglect or default in the execution of this Act or any other law or enactment, duty or authority or be instituted in any court unless it is commenced within three months after the accrual of any cause of action in respect of any such act, neglect or default and provided such act or omission was not done in good faith. Pre-action notice. 308.—(1) A suit shall not be commenced against the Commission or Authority or any officer of the Commission or Authority, before the expiration of a period of one month after a written notice of the intention to commence the suit has been served on the Commission or the Authority. (2) The notice referred to in subsection (1) shall state the cause of action, the particulars of claim, the name and address of the claimant and the reliefs sought. Petroleum Industry Act, 2021 2021 No. 6 A 317 (3) A notice, summons or other document required or authorised 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 office of the Commission Chief Executive or the Authority Chief Executive. (4) An order for execution or attachment of any property of the Commission or Authority shall not be issued unless a three months’ notice of the intention to commence execution process has been given to the Commission or Authority. 309. Subject to the Constitution of the Federal Republic of Nigeria, 1999, upon the commencement of this Act, where the provisions of any other enactment or law except the Nigeria Oil and Gas Industry Content Development Act are inconsistent with the provisions of this Act, the provisions of this Act shall prevail and the provisions of that other enactment or law shall, to the extent of that inconsistency, be void in relation to matters provided for in this Act. Consequential amendments. 310.—(1) From the effective date of this Act the following enactments and regulations are repealed— Repeals. (a) Associated Gas Reinjection Act, 1979, Cap. A25, Laws of the Federation of Nigeria, 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 under section 54 (3) of this Act ; (f ) Petroleum Products Pricing Regulatory Agency (Establishment) Act No. 8, 2003 ; (g) upon the completion of the conversion process under section 92, the Petroleum Profit Tax Act, Cap. P13, LFN, 2004, provided the repeal shall apply from the effective date to any new acreage granted under this Act ; and (h) upon the completion of the conversion process under section 92, the Deep Offshore and Inland Basin Production Sharing Contract Act, 2019, as amended, provided the repeal shall apply from the effective date to any new acreage granted under this Act. Cap. C23, LFN, 2004. Act No. 2, 2010. A 318 2021 No. 6 Petroleum Industry Act, 2021 (2) With respect to the Petroleum Equalisation Fund, the Authority as of the Effective Date shall be in charge of — (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. (3) Where the Petroleum Equalisation Fund is insufficient to make the payments under subsection (2) (b), the Authority may prorate the amounts payable based on the ratio between the funds remaining and the outstanding payables, provided that where the Petroleum Equalisation Fund is in a deficit, the proration shall be zero, and oil marketing companies shall have no claim as to further outstanding amounts. (4) Any amount remaining in the Petroleum Equalisation Fund after the completion of the transactions under subsections (2) (a), (b) and (3) shall be transferred to the Midstream and Downstream Gas Infrastructure Fund. Saving provisions. 311.—(1) Any Act, subsidiary legislation or regulation, guideline, directive and order made under any principal legislation repealed or amended by this Act, shall, in so far as it is not inconsistent with this Act, continue in force mutatis mutandis as if they had been issued by the Commission or Authority under this Act until revoked or replaced by an amendment to this Act or by subsidiary legislation made under this Act and shall be deemed for all purposes to have been made under this Act. Cap. P10, LFN, 2004. (2) Any oil prospecting licence or oil mining lease granted under the Petroleum Act, that is subsisting as at the effective date of this Act shall continue to have effect, subject to the following terms and conditions— (a) with respect to renewed leases renegotiated production sharing contracts within the period specified in this section, the following conditions shall apply,— (i) where negotiations of the contracts are continuing upon the effective date of this Act, such contracts shall be signed within one year of the effective date and in the event of failure to complete the negotiations within one year of the effective date, such contract shall be deemed to conform to the provisions of this Act at the expiration of the lease, (ii) where the contracts were or are signed by NNPC, the leases shall be assigned to NNPC Limited without prior approval of the contractor and NNPC Limited shall continue its role as concessionaire under such leases, NNPC shall by written notice notify the contractor of such assignment, Petroleum Industry Act, 2021 2021 No. 6 (iii) the renewed leases renegotiated production sharing contracts, shall not feature any investment tax credits unless such investment tax credits are carried forward as part of a renegotiation of a production sharing contract within the period specified in this section and shall feature a cost oil limit of not more than 60% of the total oil production, a minimum of 55% haircut on disputed amount and for the purpose of determining the profit oil share based on cumulative production, the production from the total production of all production areas selected under section 93 of the Act shall be used, (iv) the contracts and leases shall continue to be subject to the legislation under subsection (9), provided that such leases shall be subject to section 93 of this Act and in this respect the conversion date for the purpose of the interpretation of section 93 of this Act shall be the signing date of such renegotiated production sharing contracts, and (v) upon expiration or terminations, the leases and renegotiated production sharing contracts can only be renewed on the basis of the provisions of this Act ; (b) any oil prospecting licence and oil mining lease that is being converted shall be converted under section 92 (1) - (5) and (7) of this Act ; (c) with respect to other oil prospecting licences and oil mining leases that do not wish to convert under section 92 (6), section 303 (2) of this Act and subsection (9) of this section shall apply and the domestic gas price that is the applicable gas prices established prior to the effective date of this Act and for licence and leases awarded to indigenous Nigerian companies on a sole risk basis under the Petroleum Act on which the Government has successfully exercised its back-in rights prior to the effective date of this Act, section 92 (5) of this Act shall apply save for the royalty which shall be 0% per field for the period of five years from the date of commencement of the field production including all relevant accounting period prior to the effective date and section 311 (9) (d) of this Act, any Act, subsidiary legislation or regulation, guideline, directive or order saved under this Act shall be deemed amended accordingly ; and (d) contractors of NNPC, oil prospecting licences and oil mining leases shall be subject to sections 232 and 233 of this Act. (3) Any other licence, lease, certificate, authority or permit which was issued by the Department of Petroleum Resources, Petroleum Products Pricing and Regulatory Agency or Petroleum Equalisation Fund, as the case may be and which had effect immediately before the effective date shall continue to have effect, mutatis mutandis, for the remainder of its period of validity as if it had been issued by the Commission or Authority. A 319 Cap. P10, LFN, 2004. A 320 2021 No. 6 Petroleum Industry Act, 2021 (4) Any tariff, price, levy, or surcharge which was payable to the Department of Petroleum Resources, Petroleum Products Pricing and Regulatory Agency or Petroleum Equalisation Fund prior to the effective date shall continue in force until the expiration of the term of the said tariff, price, levy, or surcharge, or until alternative provisions are made under this Act or any regulations made under it, whichever is earlier. (5) Pending the decision of the Authority under sections 125 (6) and 174 (6) of this Act, the existing licence, permit or right shall continue in force as if it had been issued under this Act. (6) Any other permit or other right in respect of any sector of the petroleum industry to which subsections (2), (3) and (4) do not apply and that has been granted by the Department of Petroleum Resources, Petroleum Pricing and Product Regulatory Agency or Petroleum Equalisation Fund, as the case may be, and which is still in existence on the effective date, shall continue in force for the remainder of its duration as if it had been issued under this Act. (7) With respect to subsection (4), any payments under Chapter 2 of this Act shall be applicable to the respective licensees and holders of permits and rights. (8) Within three months from the effective date, the Minister of Petroleum on the advice of the Commission or Authority, may make any further transitional and savings provisions that are necessary or desirable, provided that such provisions are consistent with the transitional and savings provisions in this Act. (9) Notwithstanding the provisions of section 310 of this Act, the following laws shall be saved until the termination or expiration of all oil prospecting licences and oil mining leases under subsection (2) (c)— (a) Petroleum Act, Cap. P10, Laws of the Federation of Nigeria, 2004 ; (b) Petroleum Profit Tax Act, Cap. P13, Laws of the Federation of Nigeria, 2004 ; (c) Oil Pipelines Act, Cap. 07, Laws of the Federation of Nigeria, 2004 and any subsidiary legislation shall, in so far as it is consistent with this Act, remain in operation until it is repealed or revoked and shall be deemed for all purposes to have been made under this Act ; (d) Deep Offshore and Inland Basin Production Sharing Contracts Act, Cap. D3, Laws of the Federation of Nigeria, 2004 and its Amendment ; and (e) any other law or regulations that are consistent with the principles of section 92 (6) of this Act. Petroleum Industry Act, 2021 2021 No. 6 A 321 (10) Subject to sections 125 (6) and 174 (6) of this Act, parties to gas sales agreements related to domestic sales or exports entered into prior to the effective date shall be entitled to continue such agreements unaltered until the termination of such agreements, provided, however, that such agreements shall be submitted for review to the Authority and the Commission and where so ordered by the Authority or Commission, as the case may be, amendments shall be made in such agreements to comply with the Act. 312.—(1) The Commission shall be vested with all assets, funds, resources and other movable and immovable properties which immediately before the effective date were held by the Petroleum Inspectorate or the Department of Petroleum Resources. Transfer of assets and liability to the Commission. (2) The rights, interests, obligations and liabilities of the Petroleum Inspectorate and Department of Petroleum Resources existing immediately before the effective date under any contract or instrument or law or in equity are assigned to and vested in the Commission. (3) Any contract or instrument covered by subsection (2) shall be of the same force and effect against or in favour of the Commission and shall be enforceable as fully and effectively as if instead of the Petroleum Inspectorate or Department of Petroleum Resources, the Commission had been named therein or had been a party thereto. (4) The Commission shall be subject to all the obligations and liabilities to which the Petroleum Inspectorate and Department of Petroleum Resources were subject immediately before the effective date and all other persons shall as from the effective date have the same rights, powers and remedies against the Commission as they had against the Petroleum Inspectorate or Department of Petroleum Resources immediately before the effective date. 313.—(1) The Authority shall be vested with all assets, funds, resources and other movable and immovable properties, which immediately before the effective date were held by the Petroleum Pricing and Product Regulatory Agency, the Petroleum Equalisation Fund (Management Board) and the relevant assets, funds, resources and other movable and immovable properties held by Department of Petroleum Resources, the Petroleum Pricing and Product Regulatory Agency, and the Petroleum Equalisation Fund (Management Board). (2) The rights, interests, obligations and liabilities of the Department of Petroleum Resources, the Petroleum Pricing and Product Regulatory Agency, and the Petroleum Equalisation Fund (Management Board) existing immediately before the effective date under any contract or instrument or law or in equity are assigned to and vested in the Authority. Transfer of assets and liability to the Authority. A 322 2021 No. 6 Petroleum Industry Act, 2021 (3) Any contract or instrument covered by subsection (2) shall be of the same force and effect against or in favour of the Authority and shall be enforceable as fully and effectively as if instead of the Department of Petroleum Resources, the Petroleum Pricing and Product Regulatory Agency, and the Petroleum Equalisation Fund (Management Board) had been named therein or had been a party thereto. (4) The Authority shall be subject to all the obligations and liabilities to which the Petroleum Pricing and Product Regulatory Agency, the Petroleum Equalisation Fund (Management Board) and the relevant divisions of Department of Petroleum Resources, were subject immediately before the effective date and all other persons shall as from the effective date have the same rights, powers and remedies against the Authority as they had against the Petroleum Pricing and Product Regulatory Agency, the Petroleum Equalisation Fund (Management Board) and the relevant divisions of Department of Petroleum Resources immediately before the effective date. Transfer of employees and conditions of service. 314.—(1) From the effective date, employees in the relevant divisions in the Petroleum Inspectorate or the Department of Petroleum Resources shall be employees of the Commission on terms no less favourable to those in effect immediately prior to such transfer, and all years of service with the Petroleum Inspectorate or the Department of Petroleum Resources, as applicable, shall be deemed to be years of service qualifying for employmentrelated entitlements under any applicable law. (2) The Commission shall assume and continue to fulfil all statutory obligations in respect of pension schemes to which the Petroleum Inspectorate or the Department of Petroleum Resources, as applicable, was obliged in respect of its employees, prior to the effective date. (3) From the effective date, employees in the relevant divisions of the Department of Petroleum Resources, the Petroleum Pricing and Product Regulatory Agency, and the Petroleum Equalisation Fund (Management Board), shall be employees of the Authority on terms no less favourable to those in effect immediately prior to the effective date, and all years of service with the Department of Petroleum Resources, the Petroleum Pricing and Product Regulatory Agency or the Petroleum Equalisation Fund (Management Board), as applicable, shall be deemed to be years of service qualifying for employment-related entitlements under any applicable law. (4) The Authority shall assume and continue to fulfil all statutory obligations in respect of pension schemes to which the Department of Petroleum Resources, the Petroleum Pricing and Product Regulatory Agency and the Petroleum Equalisation Fund (Management Board), as applicable, was obliged in respect of its employees, prior to the effective date. Petroleum Industry Act, 2021 2021 No. 6 315. As part of the implementation process of sections 313 and 57 of this Act, the Minister may within 24 months of the effective date cause an inter-agency transfer of any staff of the institutions listed below to the Commission, the Authority or NNPC Limited based on skills and competence requirements of the new institutions, if the skills and competence of the said staff are most suitable in any of the successor institutions during the implementation process— A 323 Movement of staff of the institutions. (a) Department of Petroleum Resources ; (b) Nigerian National Petroleum Corporation and any of its subsidiaries ; (c) Petroleum Equalisation Fund ; (d) Petroleum Inspectorate ; and (e) Petroleum Products Pricing and Regulatory Authority. 316.—(1) Every settlor shall transfer any existing host communities development project or scheme under its corporate social responsibility or memorandum of understanding or any other agreement to a host communities development trust established under this Act. (2) Every applicable settlor shall notify the Commission or Authority, as the case may be, upon completion of any transfer under subsection (1) to any one or more host communities development trusts of any of its existing host communities development projects or schemes. Transfer of existing host communities development projects and host communities development schemes. (3) Any financial contribution made by a settlor from the effective date until the date falling 12 months after the effective date to any ongoing host communities development project or scheme in accordance with their terms, shall be deemed to constitute a contribution made by such holder or holder nominee under section 240 (2) of this Act. 317.—(1) Anything made or done, or having effect as if made or done, before the effective date of this Act under or pursuant to any provision of the Petroleum Act, the Petroleum Profit Tax Act and the Deep Offshore and Inland Basin Production Sharing Contract Act by the Service and having any continuing or resulting effect with respect to the taxation of the profits of a company or any matter connected to it, shall be treated and for all purposes shall have effect as if it were made or done by the Service under the corresponding provisions of this Act. (2) All rules, orders, notices or other 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. Transitional and savings provisions. Cap. P10. LFN, 2004. Cap. P13, LFN, 2004. Cap. D3, LFN, 2004. A 324 2021 No. 6 Petroleum Industry Act, 2021 (3) All references in any other enactment to provisions of the Petroleum Act, the Petroleum Profits Tax Act and the Deep Offshore and Inland Basin Production Sharing Contract Act shall be construed as references to the corresponding provisions of this Act. (4) With respect to petroleum mining leases selected under section 93 (6) (b) and (7) (b) 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, provided the allowances relate to upstream petroleum operations and do not include investment tax allowances and investment tax credits. (5) Subject to section 303 (1) of this Act, the provisions of Chapter 4, Parts II and X of this Act shall apply upon the commencement of the first accounting period following the effective date. (6) From the effective date, the Government on behalf of the Federation may request the services of NNPC Limited as supplier of last resort to ensure adequate supply and distribution of premium motor spirit (PMS) for a period not exceeding six months and all associated costs shall be for the account of the Federation. (7) The Minister shall set forward a clear transition plan within 60 days of the effective date of the Act to prevent disruptions of the industry operations. (8) The Authority may apply the Backward Integration Policy in the downstream petroleum sector to encourage investment in local refining. (9) Pursuant to subsection (8), licence to import any product shortfalls may be assigned to companies with active local refining licences or proven track records of international crude oil and petroleum products trading. (10) Import volume to be allocated between participants shall be based on criteria to be set by the Authority taking into account the respective refining output in the preceding quarter, share of active wholesale customers competitive pricing and prudent supply, storage and distribution track records. (11) To safeguard the health of Nigerians, imported petroleum products shall conform to the Afri-5 Specification (50 ppm Sulphur) as per the ECOWAS declaration of February, 2020 on adoption of the Afri-Fuels Roadmap or as may be prescribed by regulation. Interpretation. 318. In this Act— “accounting date” means the date on which a company usually prepares its accounting statement ;