Petroleum Industry Act, 2021 PDF
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2021
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This document is a glossary of terms from the 2021 Petroleum Industry Act, Nigeria. It provides definitions and explanations of various legal terms related to the petroleum industry in Nigeria. Key terms are included for a better understanding. The document seems to cover legal terminology pertaining to petroleum operations in Nigeria.
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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...
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 ; Petroleum Industry Act, 2021 2021 No. 6 “accounting period” in relation to a company engaged in upstream petroleum operations, means — (a) a period of one year commencing on 1st January and ending on 31st December of the same year, (b) any shorter period commencing on the day the company first makes a sale or bulk disposal of chargeable oil, domestic, export or both, and ending on 31st December of the same year, or (c) any period of less than a year being a period commencing on 1st January of any year and ending on the date in the same year when the company ceases to be engaged in petroleum operations, and in the event of any dispute with respect to the date of the first sale of chargeable oil above or with respect to the date on which the company ceases to be engaged in petroleum operations, the Commission shall determine the same and no appeal shall lie ; “Act” means the Petroleum Industry Act, 2021 ; “adjusted profits” means adjusted profit as stated in section 262 of this Act ; “advisory committee” has the meaning given to it in section 249 of this Act ; “affiliate” means the relationship that exists between two persons when one controls or is controlled by, an entity which controls, the other person, where ‘control’ means the direct or indirect ownership of more than 50% of the voting rights in a company, partnership or legal entity ; “aggregate gas price” means the gas price determined under section 167 (4) of this Act ; “appraisal well” means a well that in the opinion of the Commission is aimed at determining the size, distribution, characteristics and commerciality of a petroleum discovery ; “area of operation” means the territory which hosts a lessee’s or licensee’s operational or designated facilities and any other ancillary facilities related to upstream and midstream petroleum operations ; “assessable profit” means assessable profit as stated in section 262 of this Act ; “associated gas” means— (a) natural gas, commonly known as gas-cap gas, which overlies and is in contact with crude oil in a reservoir ; and (b) solution gas dissolved in crude oil in a reservoir and emerging from the fluid as pressure drops ; A 325 A 326 2021 No. 6 Petroleum Industry Act, 2021 “authorisation” means approval issued by the Commission or Authority for an activity in the petroleum industry ; “Authority” means the Nigerian Midstream and Downstream Petroleum Regulatory Authority” as provided for in this Act ; “Authority Fund” means the Fund established under section 47 of this Act ; “barrel” means a barrel of 42 United States gallons ; “Board” means the governing board of the Commission, Authority, NNPC Limited or an incorporated joint venture company (IJVC) ; “Board of Trustees” means the governing board of the trust established under section 242 of this Act ; “bulk gas storage licence” means a licence granted under section 132 of this Act ; “capital fund” means the fund available to the Board of Trustees of a host communities development trust for communities development projects and other matters on behalf of the holder or holders as provided for in this Act ; “chargeable oil” means crude oil, condensate or natural gas liquids produced upstream of the measurement point as provided for under section 260 (1) (a) of this Act ; “chargeable profit” means chargeable profit as stated in section 262 of this Act ; “chargeable tax” means chargeable tax as stated in section 267 of this Act ; “chargeable volume” in relation to a company engaged in upstream petroleum operations means the chargeable volume as set out in paragraph 7 of the Seventh Schedule to this Act ; “commercial discovery” means a discovery of crude oil, natural gas or condensates within a petroleum prospecting licence or petroleum mining lease which can be economically developed in the opinion of the licensee or lessee after consideration of all relevant economic factors normally applied for the evaluation and development of crude oil, natural gas or condensate ; “Commission” means the Nigerian Upstream Petroleum Regulatory Commission established under this Act ; “common carrier” means a transportation pipeline which is operated on an open access basis ; “Commission Fund” means the fund established under section 24 of this Act ; Petroleum Industry Act, 2021 2021 No. 6 “company” means in this Act, any company or corporation, other than a corporation sole, incorporated under the Companies and Allied Matters Act, Act No. 3, 2020 ; “condensate” means a portion of natural gas of such composition that are in the gaseous phase at temperature and pressure of the reservoirs, but that, when produced, are in the liquid phase at surface pressure and temperature ; “connection agreement” means an agreement setting out the terms on which individual, physical connections to the transportation pipeline, transportation network or gas distribution network will be effected and matters such as the configuration, pressure, technical parameters and cost of the connection ; “Constitution” means the Constitution of the Federal Republic of Nigeria, 1999, Cap. C23, Laws of the Federation of Nigeria, 2004 ; “conversion contract” means a contract under section 92 of this Act ; “conversion date” means the date under section 92 of this Act ; “Corporate Affairs Commission” means the Corporate Affairs Commission established under the Companies and Allied Matters Act, Act No. 3, 2020 ; “corrupt practices and money laundering laws” means— (a) the laws of the Government in respect of bribery, kickbacks and corrupt business practices, (b) the Foreign Corrupt Practices Act of 1977 of the United States of America (Pub. L. No. 95-213 §§ 101-104 et. seq.), (c) the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, signed in Paris on 17 December, 1997, which entered into force on 15 February, 1999, and the Convention’s Commentaries, (d) the United Kingdom Bribery Act, 2010, and (e) any other law of general application relating to bribery, kickbacks or corrupt business practices ; “Council” means the Governing Council established under section 52 (3) of this Act ; “crude oil” means petroleum, which is in liquid conditions upon production from a reservoir either in its natural state or after the extraction of water, sand or other foreign substance from it, but before any such oil has been refined or otherwise treated, other than oil extracted by destructive distillation from coal, bituminous shales or other stratified deposits ; “crude oil refiner” means the holder of a crude oil refining licence under section 183 of this Act; A 327 A 328 2021 No. 6 Petroleum Industry Act, 2021 “customary court” means a customary court established by the applicable laws of a State of the Federation or the Federal Capital Territory ; “customer client” means a wholesale customer of the strategic sector who is a client of the domestic gas aggregator making use of the escrow account mechanism ; “customer client volume” is the volume of natural gas that is paid for by a customer client for the benefit of a specific producer client into the escrow account of the domestic gas aggregator in any one month ; “customer protection” means the standards, practices and service protections for customers including, those relating to pricing, service quality and standards, billing practices, performance reporting and any regulations of the Commission and Authority that provide such protections ; “decommissioning and abandonment” means the approved process of cessation of operations of crude oil and natural gas wells, installations, plants and structures, including shutting down an installation’s operations and production, total or partial removal of installations and structures where applicable, chemicals and all such other materials handling, removal and disposal of debris and removed items, environmental restoration of the area after removal of installations, plants and structures, and ‘decommission’ has a corresponding meaning ; “decommissioning and abandonment fund” has the meaning given to it in section 233 of this Act ; “decommissioning and abandonment plan” means the plan to be submitted in the field development plan under section 79 (2) for upstream petroleum operations and under section 111 (3) of this Act for midstream petroleum operations ; “deep offshore” means any area within the territorial waters, continental shelf or exclusive economic zone offshore of Nigeria having a water depth in excess of 200 meters ; “deep rights” means petroleum rights vested in the Government after relinquishment under section 88 (5) (b) of this Act ; “Department of Petroleum Resources” means the Department of Petroleum Resources of the Federal Ministry of Petroleum Resources ; “designated facilities” means petroleum crude oil and natural gas transportation pipelines, bulk storage tank farms, refineries, and gas processing plants in midstream petroleum operations and petrochemical plants ; “distribution pipeline” means a low-pressure pipeline for the purpose of conveying natural gas or petroleum products to customers ; Petroleum Industry Act, 2021 2021 No. 6 “disposal” and “disposed of” in relation to chargeable oil owned by a company engaged in petroleum operations, means— (a) delivery or export, without sale, of chargeable oil to an affiliate or other company, and (b) chargeable oil delivered or transferred, without sale, to facilities used for midstream operations ; “domestic base price” means the price determined under the Third Schedule to this Act ; “domestic crude oil supply obligation” means the obligations of an upstream crude oil producer to dedicate a specific volume of crude oil towards the domestic refineries as stipulated in section 109 of this Act ; “domestic gas aggregator” means a licensee of a domestic gas aggregation licence ; “domestic gas aggregation licence” means a licence granted under section 153 of this Act ; “domestic gas demand requirement” means an aggregate of the volume of natural gas required to meet the natural gas demand for strategic sectors within the domestic economy for a specified period under section 173 of this Act ; “domestic gas delivery obligation” means the obligations of a lessee producing natural gas to dedicate and deliver to a transfer point a specific volume of natural gas towards meeting the domestic gas demand requirement, as stipulated in section 110 of this Act ; “downstream gas operations” means all activities entered into for the purpose of, distribution and supply of natural gas to retail customers, city gate reception terminals for natural gas, stations for the distribution, marketing and retailing of natural gas ; “downstream petroleum products operations” means all activities entered into for the purpose of distribution and supply of petroleum products to retail customers, tank farms for distribution of petroleum products, and stations for the distribution, marketing and retailing of petroleum products ; “downstream petroleum operations” means downstream gas operations and downstream petroleum products operations ; “effective date” means the date on which this Act comes into force ; “exploration well” means a well that in the opinion of the Commission is aimed at discovering petroleum in a separate field in which petroleum has not been previously discovered ; “domestic base price” means the price determined under subsection 167 (1) of this Act ; A 329 A 330 2021 No. 6 Petroleum Industry Act, 2021 “Federal High Court” means the Federal High Court established by section 249 of the Constitution of the Federal Republic of Nigeria, 1999 ; “Federation Account” means the Federation Account stated in section 162 of the Constitution of the Federal Republic of Nigeria, 1999 ; “field development plan” means a field development plan as specified under section 79 (2) of this Act ; “field” includes an area consisting of a single reservoir or multiple reservoirs all grouped on, or related to, the same geological structural feature, stratigraphic condition, a combination of both and refers to the underground productive formations or their vertical projection to the surface ; “fiscal gas price” means the price established in paragraph 8 (3) of the Seventh Schedule to this Act ; “fiscal oil price” means the price established in paragraphs 8 (1) and (2) of the Seventh Schedule to this Act ; “force majeure” includes delays or inability to perform any obligations under this Act (other than a payment obligation), due to any event beyond the reasonable control of a person, and the event may be, but is not limited to, any act, event, happening, or occurrence due to natural causes, and acts or perils of navigation, fire, hostilities, war (declared or undeclared), blockade, labour disturbances, strikes, riots, insurrection, civil commotion, quarantine restrictions, epidemics, storms, floods, earthquakes, accidents, blowouts or lightning and an event of force majeure shall not include changes in the laws of Nigeria or any political subdivision thereof or any acts or orders of Government, any minister, ministry, department, subdivision, agency, authority, council, committee, or other constituent element thereof, or any corporation owned or controlled by any of the foregoing, where operations are delayed, curtailed or prevented by force majeure, then the time for carrying out the obligation and duties thereby affected, and rights and obligations hereunder, shall be extended for a period equal to the period thus involved provided that such period shall not exceed three years in total after which each party can terminate the respective licence or lease ; “frontier acreages” means any or all acreages in an area on land in Nigeria defined as a frontier in a regulation issued by the Commission ; “frontier basin” means basins where hydrocarbon exploration activities have not been carried out or previous commercial discovery oil and gas have not been made or an area that is undeveloped and includes Anambra, Dahomey, Bida, Sokoto, Chad and Benue trough or as may be declared by the Commission through a regulation ; “frontier exploration fund” means the fund established in section 9 (3) of this Act; Petroleum Industry Act, 2021 2021 No. 6 “fund manager” means a person or company appointed by the Board of Trustees to manage and invest the reserve fund established under the provisions of Chapter 3 of this Act for the benefit of the trust; “gas distribution licence” means a licence for the distribution of natural gas through a low-pressure pipeline system in a specific geographical area under section 148 of this Act ; “gas distribution network” means a set of interconnected distribution pipelines for natural gas ; “gas distributor” means the holder of a gas distribution licence ; “gas processing licence” means a licence granted under section 129 of this Act ; “gas retailer” means a holder of a retail gas supply licence under section 146 of this Act ; “gas transportation network” means a set of interconnected gas transportation pipelines in a particular geographical area ; “gas transportation network operator licence” means a licence to operate a gas transportation network under section 138 of this Act ; “gas transportation network operator” means the holder of a gas transportation network operator licence ; “gas transportation pipeline” means a pipeline for the transportation of natural gas ; “gas transportation pipeline licence” means a licence for a gas transportation pipeline granted under section 135 of this Act ; “good international petroleum industry practices” means those uses and practices that are, at the time in question, generally accepted in the international petroleum industry as being good, safe, economical, environmentally sound and efficient in petroleum operations and should reflect standards of service and technology that are either state-of-the-art or otherwise appropriate to the operations in question and should be applied using standards in all matters that are no less rigorous than those in use by petroleum companies in global operations ; “Government” means the Federal Government of Nigeria ; “host communities” means communities situated in or appurtenant to the area of operation of a settlor, and any other community as a settlor may determine under Chapter 3 of this Act ; “host communities development plan” has the meaning given to it in section 252 of this Act ; “host communities development trust” has the meaning given to it in section 235 (1) of this Act ; A 331 A 332 2021 No. 6 Petroleum Industry Act, 2021 “host communities development trust fund” means the fund established under section 240 (1) of this Act ; “host communities needs assessment” has the meaning given to it in section 251 (1) of this Act ; “large-scale gas utilisation industries” means— (a) large-scale industries that use natural gas as a feedstock such as gas-to-liquid plants, petrochemical industries and fertiliser plants; and (b) mini-LNG plants, power plants and such other industries as defined in regulations ; “lease” means a petroleum mining lease ; “lessee” means a holder of a lease ; “LIBOR” means London Interbank Offered Rate ; “licence” means a licence issued by the Commission or Authority in respect of any applicable upstream, midstream or downstream petroleum operations ; “licensee” means a holder of a licence ; “licensing round guidelines” means guidelines that are established by the Commission to govern the process of issuing licences or leases during a licensing round ; “liquefied natural gas” or “LNG” means natural gas in liquid form through condensation at close to atmospheric pressure and at a temperature of approximately minus 162 degrees celsius ; “liquefied petroleum gas” or “LPG” means mixtures of propane and butane and small concentrations of other gases which are gaseous under room temperature and pressure but are liquefied by applying pressure ; “local distribution zone” means an authorised area as specified in regulations, within which one gas distributor may operate ; “loss” means a loss ascertained in like manner as an adjusted profit ; “management committee” means the committee set up under section 247 of this Act ; “marginal field” means a field or discovery which has been declared a marginal field prior to 1st January 2021 ; “marketable natural gas” means natural gas which meets specifications determined by the Authority for distribution to wholesale customers and retail customers— (a) for use as a domestic, commercial and industrial fuel ; and (b) as feedstock or industrial raw material ; Petroleum Industry Act, 2021 2021 No. 6 “marketable natural gas delivery point” means a point where marketable natural gas is made available to customers, at the exit of a gas processing plant or gas conditioning plant or at a measurement point, or such other location immediately downstream of a facility in which such natural gas has been produced, processed, conditioned or treated in order to produce marketable natural gas ; “measurement point” means— (a) a point determined in the field development plan under section 79 (2) of this Act, where petroleum is being measured and its value is determined for royalty purposes, (b) where the point has not been determined, a point directly downstream of the flow station in the petroleum mining lease, and (c) where measurements take place outside the petroleum mining lease, a deemed measurement point in the petroleum mining lease based on a calculation procedure approved by the Commission adjusting from the points where petroleum is being measured ; “midstream and downstream gas infrastructure fund” means the fund established under section 52 of this Act ; “midstream and downstream gas operations” means activities downstream of the measurement points of petroleum mining leases, whether or not related to the petroleum mining lease, with respect to the construction and operation of natural gas transport or transmission pipelines, including the related compressor stations, construction and operations of facilities to compress, transport and deliver compressed natural gas (CNG); construction and operations of gas processing facilities and central processing facilities, producing ethane, propane, butane and natural gas liquids and marketable natural gas; construction and operation of underground or above ground facilities for the storage of natural gas, ethane extraction plants, construction and operation of gas to liquids (GTL) plants, construction and operation of lubricant, petrochemical and fertiliser plants, construction and operation of LNG plants, and related LNG terminals as well as storage and transport of LNG, acquisition, operation or chartering of LNG tankers for coastal and marine transportation, purchase and sale, trading, bartering, aggregating and marketing of natural gas transported by pipelines, compressed natural gas, LNG, methane, ethane, propane, butane, natural gas liquids and liquids from GTL plants with respect to wholesale customers and gas distributors and related administration and overhead ; “midstream petroleum liquids operations” means activities downstream of the measurement points of petroleum mining leases, whether or not related to the petroleum mining lease, with respect to the construction and operation of facilities for upgrading of heavy oil, construction and operation of lubricant, A 333 A 334 2021 No. 6 Petroleum Industry Act, 2021 petrochemical and fertiliser plants, construction and operation of petroleum liquids transport pipelines, including the related pumping stations; acquisition, operation, leasing, rental or chartering of barges, coastal or ocean-going tankers, railcars and trucks for the transport of petroleum liquids, construction, leasing and operation of tank farms and other storage facilities and export terminals for petroleum liquids, construction and operation of refineries, purchase and sale, trading, bartering, marketing of petroleum liquids and related administration and overhead ; “midstream and downstream petroleum operations” means midstream petroleum liquids operations and midstream and downstream gas operations ; “Minister of Petroleum” or “Minister” means the Minister of Petroleum Resources or any person designated by the President as having responsibility for overseeing the Petroleum Industry ; “Ministry of Environment” means the Federal Ministry in charge of environmental matters ; “Ministry of Finance” means the Federal Ministry in charge of finance matters ; “Ministry of Finance Incorporated” means the corporation sole established by the Ministry of Finance Incorporated Act, Cap. M15, Laws of the Federation of Nigeria, 2004 ; “MMBtu” means millions of British thermal units ; “model contract” means a contract under section 85 of this Act ; “model lease” means a standard petroleum mining lease with terms and conditions adopted for a specific licensing round and may contain contractual provisions in a model contract attached to or incorporated in the model lease ; “model licence” means a standard petroleum prospecting licence with terms and conditions adopted for a specific licensing round and may contain contractual provisions in a model contract attached to or incorporated in the model licence ; “National Data Repository” means national petroleum data bank as defined in the National Data Repository Regulation, 2007 and its amendment ; “National Salaries, Incomes and Wages Commission” means the National Salaries, Incomes and Wages Commission established by section 1 of the National Salaries, Incomes and Wages Commission Act, Cap. N72, Laws of the Federation of Nigeria, 2004 ; “national strategic stock” means the reserve of petroleum products kept in certain storage depots and facilities by the Government or on behalf of the Government to provide for emergency ; Petroleum Industry Act, 2021 2021 No. 6 “natural gas” means all gaseous hydrocarbons, and all substances contained in it and as exist in natural state in strata, associated or not with crude oil, and are in a gaseous state upon production from a reservoir and excludes condensates ; “natural gas liquids” or “NGL” means hydrocarbons liquefied at the surface in separators, field facilities or in gas processing plants, and include ethane, propane, butanes, pentanes, and natural gasoline ; “Nigeria” means the territory of the Federal Republic of Nigeria inclusive of its land borders, territorial waters, continental shelf and exclusive economic zone ; “Nigerian National Petroleum Corporation” or “NNPC” means the Nigerian National Petroleum Corporation established by section 1 of the Nigerian National Petroleum Corporation Act, Cap. N123, Laws of the Federation of Nigeria, 2004 ; “NNPC Limited” means Nigerian National Petroleum Company Limited, a company to be incorporated under the Companies and Allied Matters Act under this Act ; “non-associated gas” means natural gas that is found in a reservoir which does not contain significant quantities of crude oil ; “oil mining lease” means an oil mining lease granted under the Petroleum Act, Cap. P10, Laws of the Federation of Nigeria, 2004 prior to the effective date of this Act ; “oil prospecting licence” means an oil prospecting licence granted under the Petroleum Act, Cap. P10, Laws of the Federation of Nigeria, 2004 prior to the effective date of this Act ; “onshore” means any land areas above the high-water mark, other than frontier acreages ; “open access” means, subject to section 116, non-discriminatory access to a midstream facility, transportation pipeline or transportation network for all users or shippers under conditions where the licensee does not have any preferential rights to these facilities, under conditions stipulated in the licence and in the case of a transportation network or pipeline ; “paying quantities” means in relation to the level of production of a field, the production of volumes of oil or gas or both, of which the value exceeds the royalty and operating costs on a regular basis, based on levels of production that are aimed at achieving maximum economic recovery of the petroleum ; “parcel” means a parcel under section 69 (4) of this Act ; “permit” means an official certificate of permission to undertake an activity issued by the Commission or Authority ; A 335 A 336 2021 No. 6 Petroleum Industry Act, 2021 “person” means any individual, company or other juristic person ; “petroleum” means hydrocarbons and associated substances as exist in its natural state in strata, and includes crude oil, natural gas, condensate and mixtures of any of them, but does not include bitumen and coal ; “Petroleum Equalisation Fund” means the fund established under the Petroleum Equalisation Fund (Management Board, etc.) Act, Cap. P11, Laws of the Federation of Nigeria, 2004 ; “petroleum exploration licence” means a licence under section 71 of this Act ; “petroleum exploration operations” means any geological, geophysical, geochemical and other surveys and any interpretation of data relating thereto, and the drilling of such shot holes, core holes and stratigraphic tests, related to the exploration for crude oil and natural gas, but not including exploration wells or appraisal wells ; “petroleum industry” means the industries involved in upstream, midstream and downstream petroleum operations in Nigeria ; “Petroleum Inspectorate” means the Petroleum Inspectorate established under section 10 of the Nigerian National Petroleum Corporation Act, Cap. N123, Laws of the Federation of Nigeria, 2004 ; “petroleum liquids” means crude oil, condensates, liquid petroleum products and natural gas liquids ; “petroleum liquids transportation pipeline licence” means a licence for a petroleum liquids transportation pipeline granted under section 190 of this Act ; “petroleum liquids transportation network operator” means the holder of a petroleum liquids transportation network operator licence ; “petroleum liquids transportation network operator licence” means a licence to operate a petroleum liquids transportation network under section 193 of this Act ; “petroleum liquids transportation pipeline” means a pipeline transporting petroleum liquids ; “petroleum mining lease” means a lease under section 81 of this Act ; “petroleum operations” means upstream, midstream and downstream petroleum operations ; “Petroleum Pricing and Product Regulatory Agency” means the Petroleum Pricing and Product Regulatory Agency established under section 1 of the Petroleum Pricing and Product Regulatory Agency (Establishment) Act, Cap. P43, Laws of the Federation of Nigeria, 2004 ; Petroleum Industry Act, 2021 2021 No. 6 “petroleum product distribution licence” means a licence for the distribution of petroleum products under section 201 of this Act ; “petroleum product distributor” means the holder of a petroleum product distribution licence ; “petroleum product retailer” means a holder of a petroleum product retail licence ; “petroleum product retail licence” means a permit to retail petroleum products to final customers under section 203 of this Act ; “petroleum products” means materials derived from crude oil and natural gas processing such as ethane, propane, butanes, pentanes, liquefied petroleum gas, natural gas liquids, asphalts, gasoline, diesel, gas oil, jet fuel, transportation fuels, fuel oils for heating and electricity generation and such other derivatives ; “petroleum prospecting licence” means a licence under section 72 of this Act ; “pipeline” means all parts of any tubular infrastructure through which petroleum is conveyed, including pipes, valves, pumping and compressor stations and other equipment appurtenant to pipes ; “President” means the President of the Federal Republic of Nigeria ; “producer client” means a lessee who is a client of the domestic gas aggregator making use of the escrow account mechanism ; “production sharing contract” means any agreement for the exploration, development and production of petroleum on terms under which the financial risk-bearing party shall recover costs and receives a share of the profits based on a share of production as established in the contract from the applicable area ; “public service obligations” means specific obligations imposed by the Authority on licensees in relation to security of supply, social service, economic development, environmental protection or the use of indigenous materials ; “qualified person” means a person designated by regulation in respect of the issuance of a licence, lease or permit to any person with respect to upstream, midstream and downstream petroleum operations ; “raw gas” means natural gas prior to any conditioning for the removal of H2S, CO2 and other impurities and prior to processing to remove natural gas liquids and which does not have the qualities of marketable natural gas ; “regulation” means rule or order having force of law issued by the Minister, Minister of Finance, the Commission or Authority in accordance with this Act ; A 337 A 338 2021 No. 6 Petroleum Industry Act, 2021 “rent” means the annual charge made in respect of a licence or lease granted under this Act ; “renegotiated production sharing contract” means a production sharing contract for which court cases or arbitration cases were outstanding, and was or is being renegotiated after the effective date of this Act with the objective of settling the outstanding court cases or arbitration cases ; “reserve fund” is the fund under section 244 (b) of this Act ; “reservoir” means a subsurface rock formation containing an individual and separate natural accumulation of producible petroleum characterised by a single natural pressure system ; “retail gas supply licence” means a licence granted under section 146 of this Act ; “retention area” means the area approved by the Commission for a significant gas discovery or significant crude oil discovery under this Act ; “retention period” means the period not exceeding 10 years granted by the Commission to the holder of a petroleum licence to retain rights to develop an area over which a significant gas discovery or significant crude oil discovery has been made ; “royalties” means the royalties specified in the Seventh Schedule to this Act ; “settlor” is a holder of an interest in a petroleum prospecting licence or petroleum mining lease whose area of operations is located in or appurtenant to any community or communities ; “shallow water” means any area within the territorial waters, continental shelf or exclusive economic zone offshore of Nigeria up to and including a water depth of 200 meters ; “signature bonus” means a payment made to Government with respect to the grant of a petroleum prospecting licence or petroleum mining lease ; “Significant crude oil discovery” means a discovery of crude oil that is substantial in terms of reserves and is potentially commercial, but cannot be declared commercial for one or both of the following reasons— (a) no pipeline or facilities are available in existing systems where commercial conditions indicate that the best option for development is based on the future expansion of such systems or the use of such systems when capacity will become available in the future ; or (b) where the crude oil discovery would only be commercial when jointly developed with other existing discoveries or potential future discoveries ; Petroleum Industry Act, 2021 2021 No. 6 “significant gas discovery” means a discovery of natural gas that is substantial in terms of reserves and is potentially commercial, but cannot be declared commercial for one or more of the following reasons— (a) no markets for natural gas within Nigeria ; (b) export markets need to be identified and developed ; (c) no pipeline, processing or liquefaction capacity is available in existing systems where commercial conditions indicate that the best option for development is based on the future expansion of such systems or the use of such systems when capacity will become available in the future ; or (d) where the natural gas discovery would only be commercial when jointly developed with other existing natural gas discoveries or potential future natural gas discoveries ; “special investigation unit” means a unit established either under section 27 or 50 of this Act ; “standard cubic foot” means, in relation to natural gas, the quantity of dry ideal natural gas at a temperature of 60 degrees Fahrenheit and a pressure of 14.696 pounds per square inch absolute contained in a volume of one cubic foot ; “supplier” means the holder of a wholesale gas supply licence, a wholesale petroleum liquids supply licence or a retail gas supply licence ; “tariff” means the price charged for the provision of a particular service, or group of services, with respect to midstream and downstream petroleum operations ; “terrain” means the area of any petroleum exploration licence, petroleum prospecting licence or petroleum mining lease ; “terminal” means a terminal for petroleum liquids, pumping or booster station, or other installation or structure associated with a terminal, including its storage facilities, other than a terminal situated within “a port or any approaches thereto” within the meaning of the Nigerian Ports Authority Act, Cap. N126, Laws of the Federation of Nigeria, 2004 ; “third party access” means the legal requirement for owners of certain infrastructure facilities to grant access to those facilities to parties other than themselves or their own customers, for uncommitted capacity, including competitors in the provision of the relevant services, on terms stipulated in this Act or regulations ; “transportation fuels” means fuels used for transport on land, on water and in the air, such as gasoline, aviation gasoline, diesel, jet fuel, marine bunker fuel, LNG, CNG and other fossil fuel based products, as well as hydrogen, bio-diesel, bio-jet fuel, ethanol and other fuels used for transport purposes ; A 339 A 340 2021 No. 6 Petroleum Industry Act, 2021 “transportation network” means a system of interconnected transportation pipelines and other facilities required to transport natural gas or petroleum liquids ; “transportation pipeline” means a pipeline used for the bulk conveyance of petroleum liquids and for natural gas under high-pressure ; “transportation pipeline owner” means the holder of a gas transportation pipeline licence or a petroleum liquids transportation pipeline licence ; “upstream petroleum operations” means the exploration for, appraisal of, development of and winning or obtaining of petroleum in Nigeria by or on behalf of a company on its own account for commercial purposes, petroleum exploration operations, the drilling of exploration, appraisal and development wells, all activities upstream of the measurement points, related to the winning of petroleum through wells or mining from petroleum reservoirs, drilling, fracking, completing, treatment and operation of wells producing petroleum, construction and operation of gathering lines and manifolds for crude oil, natural gas and water, construction and operation of high and low pressure separators, construction and operation of facilities to treat crude oil and natural gas, flaring of natural gas, compression and reinjection of natural gas in reservoirs, construction and operation of facilities for the production of electricity or heat from natural gas or other fuels as energy source for the winning of petroleum, injection or re-injection of water into the reservoirs, construction and operation of pipelines and other facilities for the discharge of water, construction and operation of fixed or floating platforms or other vessels required for the winning of petroleum, construction and operation of fixed or floating storage facilities of crude oil in the licence area, transportation to and from the licence area of personnel, goods and equipment, metering of well stream fluids, metering of petroleum at the measurement points prior to transportation, sale and marketing of crude oil, natural gas or condensates or any of them at the measurement points and such other activities which by regulation are considered upstream petroleum operations, and related administration and overhead, provided, however, that where field facilities or fixed or floating platforms or vessels provide for fully integrated upstream and midstream petroleum operations, the Commission may consider the entire operations as upstream petroleum operations under section 8 (d) of this Act ; “UTM” means the Universal Transverse Mercator, a conformal projection which uses a two-dimensional Cartesian coordinate system to give locations on the surface of the earth ; Petroleum Industry Act, 2021 2021 No. 6 A 341 “wholesale customer” means a class of customers designated in regulations with respect to— (a) natural gas, the right to contract for and purchase a supply of wholesale gas, with a capability to connect individually and economically to a transportation pipeline or transportation network and shall include gas distributors, and (b) crude oil or petroleum products, it shall be a customer of a yearly volume defined by regulation and shall include petroleum product distributors ; “wholesale gas” means natural gas sold by a supplier to wholesale customers ; “wholesale gas supplier” means the holder of a wholesale gas supply licence ; “wholesale gas supply licence” means a licence for the supply to wholesale customers of natural gas under section 142 of this Act ; “wholesale petroleum liquids supplier” means a holder of a wholesale petroleum liquids supply licence ; “wholesale petroleum liquids supply licence” means a licence for the supply to wholesale customers of petroleum liquids under section 197 of this Act. 319. This Act may be cited as the Petroleum Industry Act, 2021. Citation.