Petroleum Industry Act, 2021 PDF

A 224 2021 No. 6 Petroleum Industry Act, 2021 (9) Where the Authority considers it necessary that an existing tariff methodology or tariff should be amended, the Authority shall conduct a stakeholders’ consultation on the proposed amendment in accordance with subsections (4) and (5). (10) A perso...

A 224 2021 No. 6 Petroleum Industry Act, 2021 (9) Where the Authority considers it necessary that an existing tariff methodology or tariff should be amended, the Authority shall conduct a stakeholders’ consultation on the proposed amendment in accordance with subsections (4) and (5). (10) A person under obligation to set tariffs shall be bound by operative tariff methodology adopted through the method prescribed in this section. (11) A holder of a licence engaged in the sale of petroleum products to retail customers or who is subject to third party access or open access obligations under this Act, shall display at its office a current copy of the tariffs applicable to the services provided by the holder. (12) A holder of a licence shall not pass the costs of any fine or penalty incurred under this Act or any other law to a consumer. Approval and publication of charging structures. 124.—(1) A licensee subject to tariff regulation by the authority shall— (a) propose tariffs for the approval of the Authority prior to the application of the charges ; (b) impose tariffs in accordance with the approval referred to under paragraph (a) ; and (c) publish the tariffs as required by the Authority in a manner that ensures that the customers of the licensees are able to identify and calculate the charges for which they will become liable. (2) The Authority shall, within 24 months after the effective date, review, confirm or modify all applicable tariffs including for licences under sections 125 (6) and 174 (6) of this Act. PART IV—ADMINISTRATION OF MIDSTREAM AND DOWNSTREAM GAS OPERATIONS Activities requiring a licence for midstream and downstream gas operations. 125.—(1) Except in accordance with an appropriate licence issued by the Authority, a person shall not undertake the following activities with respect to midstream and downstream gas operations— (a) establish, construct or operate a facility for the processing of natural gas ; (b) establish, construct or operate a facility for the storage of natural gas ; (c) establish, construct or operate a gas transportation pipeline ; (d) engage in bulk transportation of natural gas by rail, barge or other means of transportation ; (e) operate a gas transportation network ; Petroleum Industry Act, 2021 2021 No. 6 (f ) establish, construct or operate a terminal, jetty, or other facility for the export or importation of natural gas ; (g) engage in wholesale gas supply ; or (h) engage in the construction or operation of petrochemical or fertiliser plants. (2) Except in accordance with an appropriate licence issued by the Authority, a person shall not undertake the following activities with respect to downstream gas operations— (a) retail trading, distribution or supplies of natural gas ; (b) establishment, construction or operation of a gas distribution network ; or (c) establishment, construction or operation of a facility for the supply or trading of natural gas. (3) The Authority may, by regulation, prescribe additional activities to be undertaken only on the basis of a licence or permit and shall have power to issue licences or permits for the activities in accordance with this Act. (4) Where a person engages in any of the activities set out in subsection (1), (2) or (3) without a licence or permit, the Authority shall— (a) seal the premises where the activity is undertaken ; (b) seize the facilities by which the activities were undertaken ; (c) confiscate and dispose of equipment or materials employed by the person in the activity in a manner prescribed by regulations under this Act ; (d) impose penalties as prescribed by regulations under this Act ; or (e) impose any combination of the provisions under paragraphs (a), (b), (c) and (d). (5) Notwithstanding any provision of this Act, a person who engages in any of the activities set out in subsection (1), (2) or (3) without a licence or permit, commits an offence and is liable to imprisonment for a term of— (a) one year or to a fine prescribed by regulation, in the case of an activity requiring a licence ; or (b) six months or to a fine prescribed by regulation, in the case of an activity requiring a permit. (6) A holder of a subsisting lease, licence or permit who is engaged in activities in midstream or downstream gas operations prior to the effective date shall, within 18 months from the effective date, apply to the Authority for, and the Authority may issue the appropriate licence or permit, where applicable. A 225 A 226 2021 No. 6 Petroleum Industry Act, 2021 (7) The provisions of subsections (4) and (5) shall not apply to any person under subsection (6) until the Authority has considered the application and given a decision. (8) Where any person, in applying for a licence or permit, knowingly makes a false or misleading statement, the Authority may — (a) suspend or revoke the licence or permit ; or (b) impose a fine on the licensee or permit holder on the basis of the false or misleading information. Special regulations for midstream and downstream gas operations. 126. In addition to any matter provided under section 113 of this Act, the Authority may issue regulations with respect to midstream and downstream gas operations, which shall include— Rights of way relating to midstream and downstream gas operations. 127. Subject to applicable law and the terms and conditions prescribed by the Authority, a licensee or permit holder is entitled to rights of way for the laying, operation and maintenance of pipelines, communication lines and other similar lines through or across the areas the licensee or permit holder may require for carrying on midstream or downstream gas operations under the licence or permit. Surface rights reserved for the Authority relating to midstream and downstream gas operations. 128. The Authority may for the purpose of efficiency, preserve in accordance with applicable law, rights of way, easements or other rights over any surface or seabed areas subject to an existing licence or permit, which may be necessary for the laying, operation and maintenance of transportation pipelines, communication lines, power lines and other similar lines and any right of way or other rights reserved shall continue for the benefit of any entity to whom the Authority may subsequently grant the same for a licence or permit. Grant of a gas processing licence. 129.—(1) Subject to sections 111 and 125 of this Act, the Authority may upon approval of an application and payment of prescribed fees, grant and issue a qualified person a gas processing licence, which shall permit the person to install and operate the following facilities, on its own account or on the basis of open access for customers as stipulated in the licence,— (a) the establishment and operation of a wholesale natural gas market scheme to ensure continuity of supply of natural gas to customers, which will apply to the owners and operators of gas transportation pipelines, shippers of natural gas, holders of natural gas storage and distribution licences and gas retailers ; and (b) matters ancillary to or consequential on the activities set out in paragraph (a). Petroleum Industry Act, 2021 2021 No. 6 A 227 (a) gas conditioning plants, to condition natural gas removing CO2, H2S or other impurities ; (b) gas processing plants, to produce ethane, propane, butane, other natural gas liquids and marketable natural gas ; (c) gas to liquids plants ; (d) liquefied natural gas (LNG) plants ; (e) ethane extraction plants ; and (f ) other plants, which in the opinion of the Authority, require a gas processing licence. (2) The Authority shall, in considering an application for a gas processing licence, take into account the economic case for the specific facility as provided under subsection (1), including the potential demand for its use. 130. The holder of a gas processing licence shall undertake the activities contemplated by the licence in a manner that complies with the following general obligations— (a) to construct, operate and maintain its gas processing equipment and facilities in an economical, safe, reliable and environmentally sustainable manner ; (b) shut down its facilities in emergencies and in order to carry out maintenance or in accordance with curtailment directives issued by the Authority ; (c) manage its facilities as a responsible and prudent operator ; (d) avoid any act or omission that may affect the compatibility of the processing facility with any natural gas facility or network that is likely to prejudice the public interest or the integrity of network operations ; (e) operate the facilities in a manner that results in output of products with specifications as determined by the Authority ; (f) to operate its facilities subject to open access commitments as stipulated in the licence or where the licence is issued for operations on its own account, provide third party access in an equitable manner ; (g) treat all customers in a non-discriminatory manner under section 116 of this Act, where the licence is issued on an open access basis ; and (h) abstain from activities, which in the opinion of the Authority may prevent, restrict or distort competition. General duties of the holder of a gas processing licence. Petroleum Industry Act, 2021 A 228 2021 No. 6 Conditions applicable to a gas processing licence. 131. A gas processing licence shall, in addition to the conditions that may be imposed by the Authority under section 114 of this Act, be deemed to be granted subject to the condition that— Grant of a bulk gas storage licence. 132.—(1) Subject to sections 111 and 125 of this Act, the Authority may upon approval of an application and payment of prescribed fees, grant and issue a qualified person a bulk gas storage licence authorising the holder to undertake the bulk storage of natural gas either for its own account or on behalf of customers as stipulated in the licence. (a) the holder shall not process natural gas on its own account, where the licence is issued on an open access basis ; (b) a licensee operating on its own account, being an affiliate of a lessee, may own, or the affiliate may own, the natural gas in a gas conditioning plant or gas processing plant for the purpose of conditioning or processing natural gas from the fields under lease with the affiliate, subject to such third party access provisions as may be included in the licence ; (c) a licensee operating on its own account, who is also a wholesale customer or a holder of a gas distributor licence, may own the natural gas in a gas processing plant, ethane extraction plant or other plant requiring a gas processing licence, where the principal user of the natural gas is the wholesale customer or gas distributor, subject to any third party access provisions as may be included in the licence ; (d) the holder shall conduct its licenced activities safely and reliably in compliance with any law in force and any prescribed health and safety regulations, standards and operating procedures made under this or any other Act ; (e) the holder shall have regard to the effect of its licenced activities on the environment and comply with the requirements for environmental protection, management and restoration under this Act and any law in force ; and (f ) the holder shall mark, maintain and secure the boundaries of its facilities and associated infrastructure constructed under the terms of its licence and any law in force. (2) The Authority shall, in considering an application for a bulk gas storage licence, take into account the economic case for a bulk gas storage facility, including the potential demand for its use. General duties of a bulk gas storage licensee. 133. The holder of a bulk gas storage licence shall undertake the activities contemplated by the licence in a manner that complies with the following general obligations— Petroleum Industry Act, 2021 2021 No. 6 A 229 (a) establish and make available to the public at its offices, the— (i) procedure and terms for obtaining third party access or throughput services on an open access basis, and (ii) method of response to the request for its services ; (b) construct, operate and maintain its facilities in a safe, economical, reliable, and environmentally sustainable manner taking into account any strategic plans formulated by the Authority ; (c) shut down its facilities in emergencies and in order to carry out maintenance or in response to curtailment directives issued by the Authority ; (d) where the licensee operates for its own account, grant to third parties the right to use or have access to capacity within its facilities for the purpose of ensuring competitive gas supply ; (e) consult with and obtain from the Authority written permission prior to any modification of technical and operational rule of practice concerning the operation of its facilities ; (f ) conduct its licenced activities in a non-discriminatory manner under section 116 of this Act, where the licence is issued on an open access basis ; (g) manage its facilities as a reasonable and prudent operator ; and (h) abstain from activities, which in the opinion of the Authority may prevent, restrict or distort competition. 134. In addition to conditions the Authority may impose under section 114 of this Act, a bulk gas storage licence shall be deemed to be granted subject to the conditions that— (a) a licensee operating on its own account, being an affiliate of a lessee, may own, or the affiliate may own, the natural gas in the bulk storage facilities for the purpose of storing natural gas from the fields of the affiliate, subject to such third party access provisions as may be included in the licence ; (b) a licensee operating on its own account, who is also a wholesale customer or holder of a gas distributor licence, may own the natural gas in the bulk storage facilities, where the principal user of the natural gas is the wholesale customer or gas distributor, subject to any third party access provisions as may be included in the licence ; (c) the holder conduct its licenced activities safely and reliably in compliance with any law in force and prescribed health and safety regulations issued under this or any other Act ; (d) the holder have regard to the effect of its licenced activities on the environment and comply with the requirements for environmental protection, management, and restoration under this Act and any law in force ; and Conditions applicable to a bulk gas storage licence. A 230 2021 No. 6 Petroleum Industry Act, 2021 (e) the holder mark, maintain and secure the boundaries of its facilities and associated infrastructure constructed under the terms of its licence and any law in force. Grant of gas transportation pipeline licence. 135.—(1) Subject to sections 111 and 125 of this Act, the Authority may upon approval of an application and payment of prescribed fees, grant and issue a qualified person a gas transportation pipeline licence with the exclusive right to own, construct, operate and maintain a gas transportation pipeline within a route as defined in the licence for its own account with third party access provisions or as common carrier as stipulated in the licence. (2) The Authority shall, in considering an application for a gas transportation pipeline licence, take into account the economic case for a gas transportation pipeline, including the potential demand for its use. General duties of a transportation pipeline owner. 136. The holder of a transportation pipeline licence shall undertake the activities contemplated by the licence in a manner that complies with the following general obligations— (a) establish and make available to the public at its offices, the— (i) procedure for obtaining and terminating transmission and interconnection services for natural gas, on a third party access or open access basis as determined in the licence and publish the tariffs established by the Authority, and (ii) method of response to the request for its service ; (b) construct, operate and maintain its gas transportation pipeline in a safe, economical, and reliable manner taking into account any strategic plans formulated by the Authority ; (c) meet on a reasonable endeavours basis requests for transportation above contractual volumes ; (d) shut down its gas transportation pipeline in emergencies and in order to carry out maintenance or in response to curtailment directives issued by the Authority ; (e) provide access on a non-discriminatory basis under section 116 of this Act, where the licence is granted on a common carrier basis ; (f ) consult with and obtain from the Authority written permission prior to any modification of technical and operational rule of practice concerning the operation of its pipeline ; (g) manage its gas transportation pipeline as a reasonable and prudent operator ; (h) where the pipeline is operated on a common carrier basis, ensure development and operation of terms for access to the gas transportation Petroleum Industry Act, 2021 2021 No. 6 A 231 pipeline in conjunction with the natural gas shipping community and where applicable comply with the relevant network code ; (i) where the pipeline is operated for its own account, operate its facilities subject to third party access obligations under this Act and regulations prescribed by the Authority ; and (j) abstain from activities, which in the opinion of the Authority may prevent, restrict or distort competition. 137. A gas transportation pipeline licence shall, in addition to the conditions that may be imposed by the Authority under section 114 of this Act, be deemed to be granted subject to the condition that— (a) the holder shall not supply natural gas to customers on its own account where the licence is granted on a common carrier basis ; (b) a licensee operating on its own account, who is an affiliate of a lessee, may own, or the affiliate may own, the natural gas in a gas transportation pipeline, for the purpose of— (i) connecting marketable natural gas produced in a field under a lease with an affiliate to another gas transportation pipeline or gas transportation network, and (ii) transporting natural gas to a plant for conditioning or processing natural gas from fields under lease with an affiliate, subject to third party access provisions as may be included in the licence ; (c) a licensee operating on its own account, who is also a wholesale customer or holder of a gas distributor licence, may own the natural gas in a gas transportation pipeline, where it is the principal user of the natural gas, subject to any third party access provisions as may be included in the licence ; (d) a licensee operating on its own account, who is also a holder of a wholesale gas supply licence, may own the natural gas in a gas transportation pipeline, for the purpose of connecting a lessee or wholesale customer to or from a gas transportation network or gas transportation pipeline, subject to such third party access provisions as may be included in the licence ; (e) the holder shall conduct its licenced activities safely and reliably in compliance with any law in force and prescribed health and safety regulations issued under this or any other Act ; (f ) the holder shall have regard to the effect of its licenced activities on the environment and comply with the requirements of environmental protection, management and restoration under this Act and any law in force ; (g) the holder shall mark, maintain and secure the boundaries of the pipelines and associated infrastructure constructed under the terms of its licence and any law in force ; Conditions applicable to a gas transportation pipeline licence. A 232 2021 No. 6 Petroleum Industry Act, 2021 (h) a pipeline transporting un-processed gas to a gas processing plant or gas conditioning plant shall require a gas transportation pipeline licence and the Commission shall— (i) determine and advise the Authority on the characteristics of the gas to be transported, and (ii) cooperate with the Authority in determining possible third party access to the pipeline ; and (i) the gas transportation pipeline may, with the approval of the Authority, be in whole or in part, a low-pressure pipeline at the request of the licensee. Grant of gas transportation network operator licence. 138.—(1) Subject to sections 111 and 125 of this Act, the Authority may upon approval of an application and payment of prescribed fees, grant and issue a qualified person a gas transportation network operator licence authorising the conduct of activities specified in the licence, which shall include— (a) conveyance of natural gas through the gas transportation network on an open access basis ; (b) balancing the inputs and off takes from the gas transportation network ; (c) providing access to shippers based on the gas network code under section 160 of this Act to the gas transportation network ; and (d) charging for the use of the gas transportation network based on tariffs established by the Authority. (2) The Authority shall grant only one gas transportation network operator licence within a geographically defined area to a single network operator, provided that the Authority may at its discretion, issue licences to other parties for the operation of isolated or dedicated gas transportation pipelines and for connecting to the gas transportation network. General duties of a gas transportation network operator. 139. The gas transportation network operator shall exercise the rights and obligations imposed on it in a manner that complies with the following general obligations— (a) establish and make available to the public at its offices, the— (i) procedure, terms and conditions for obtaining and terminating access and interconnection services to the transportation network, and (ii) method of response to the request for its service ; (b) operate an efficient and economical gas transportation network for the safe and reliable conveyance of natural gas in such a manner that is designed to meet all reasonable demands for natural gas transportation ; Petroleum Industry Act, 2021 2021 No. 6 A 233 (c) operate a nomination and balancing mechanism and an equitable curtailment of natural gas transportation whenever technical or operational expediencies requires ; (d) consult with and obtain from the Authority written permission prior to any modification of technical and operational rule of practice concerning the operation of its gas transportation network ; (e) ensure the development and operation of the network code and terms for access into the gas transportation network in collaboration with the Authority, natural gas shippers, all licensees and permit holders operating essential infrastructure ; (f ) ensure equitable and transparent access to the transportation network ; (g) manage the gas transportation network as a reasonable and prudent operator ; (h) abstain from activities, which in the opinion of the Authority may prevent, restrict or distort competition ; and (i) enter into agreements with gas transportation pipeline owners, gas distributors and wholesale customers for connection to and operation of the gas transportation network. 140. Subject to this Act, the Authority may grant the following special powers or authority to a gas transportation network operator to facilitate the conduct of its licenced activities— Powers of a transportation network operator. (a) the power to request for and obtain from the relevant shippers, information required to operate the nominations and balancing mechanism, to operate the network or to facilitate competition ; (b) the right to recover on the basis of an invoice, expenses reasonably incurred in undertaking its licenced activities, subject to any restrictions or conditions imposed by the Authority with respect to both the level and structure of its charges ; and (c) to purchase natural gas for its own operations for purposes such as testing and commissioning of facilities, compression and line fill, but shall not supply natural gas to customers on its own account. 141.—(1) In addition to the conditions as may be imposed by the Authority under section 114 of this Act, a transportation network operator licence may include an obligation to develop market rules in accordance with this Act. (2) A gas transportation network operator may be an owner of any or all of a gas transportation pipelines in a gas transportation network. (3) Where a third party is the owner of a gas transportation pipeline in a gas transportation network, the owner shall be paid the tariffs determined by Conditions applicable to a gas transportation network operator licence. A 234 2021 No. 6 Petroleum Industry Act, 2021 the Authority for non-operating owners of the pipelines by the gas transportation network operator. (4) A gas transportation network operator shall not misuse its monopoly position in the geographical area to charge franchise or other access charges for providing access to the gas transport network, other than the charges specifically permitted under this Act, and regulations made under this Act. Grant of a wholesale gas supply licence. 142. (1) Subject to sections 111 and 125 of this Act, the Authority may upon approval of an application and payment of prescribed fees, grant and issue a wholesale gas supply licence to a qualified person. (2) A company who is a lessee producing natural gas is a qualified person for the purpose of subsection (1) and shall be entitled to apply for and be issued with a wholesale gas supply licence by the Authority. (3) A wholesale gas supply licence authorises the supplier to— (a) purchase natural gas directly from any lessee or third party ; and (b) sell and deliver wholesale gas to wholesale customers and gas distributors at any location in Nigeria. General duties of a wholesale gas supplier. 143. A wholesale gas supplier shall undertake the activities contemplated by the wholesale gas supply licence in a manner that complies with the following general obligations, to— (a) provide a reliable supply of wholesale gas to wholesale customers who have entered into a gas purchase and sale agreement with the supplier ; and (b) abstain from activities, which in the opinion of the Authority may prevent, restrict or distort competition. Rights of a wholesale gas supplier. 144. Subject to the provisions of this Act, the Authority may grant the following specific powers or authority to a wholesale gas supplier to facilitate the conduct of its licenced activities, the right to— (a) terminate wholesale gas supply to a wholesale customer in the event of non-payment, following a notice period ; (b) recover from a customer, on the basis of an invoice and subject to any conditions imposed by the Authority on the level and structure of a licensee’s charges and costs reasonably incurred in the supply of wholesale gas, including the cost of natural gas incurred by the supplier, the cost of transportation of natural gas ; and (c) enter a premises, in accordance with a metering code issued by the Authority, for the purpose of reading the meters, testing and maintaining metering equipment, disconnecting customers and to remove the meters. Petroleum Industry Act, 2021 2021 No. 6 145.—(1) In addition to conditions the Authority may impose under section 114 of this Act, a wholesale gas supply licence shall be deemed to be granted subject to the supplier— (a) requesting security or applying a credit scoring methodology approved by the Authority in deciding whether supply is economical ; (b) supplying marketable natural gas to a wholesale customer with whom the supplier has entered into a gas purchase and sale agreement and who in order to connect to a gas transportation network or gas transportation pipeline is willing and able to— (i) pay for the connection, (ii) construct its own gas transportation pipeline under section 137 (c) of this Act, or (iii) pay the respective tariff to the supplier for the gas transportation pipeline owned by the supplier, A 235 Conditions applicable to a wholesale gas supply licence. subject to safety and network capacity constraints ; (c) conducting its licenced activities safely and reliably in compliance with any law in force and prescribed health and safety regulations issued under this or any other Act ; and (d) complying with customer protection measures in accordance with sections 164, 165 and 166 of this Act. (2) A wholesale gas supplier shall undertake its licenced activities in a manner that complies with the conditions of the licence. 146.—(1) Subject to sections 111 and 125 of this Act, the Authority may upon approval of an application and payment of prescribed fees, grant and issue a qualified person a retail gas supply licence authorising the holder to— (a) sell or retail compressed or liquefied marketable natural gas to customers based on being a wholesale customer or third party access to gas distribution systems of gas distributors ; and (b) establish, construct and operate facilities to deliver compressed natural gas and small scale facilities for LNG, not requiring a gas processing licence, for transportation by truck, railcar or marine vessel to customers in compressed or liquefied form, including customers using LNG as marine bunker fuel. (2) A company who is a lessee producing natural gas is a qualified person for the purpose of subsection (1) and shall be entitled to apply for and be issued with a retail gas supply licence by the Authority. Grant of retail gas supply licence. A 236 2021 No. 6 Petroleum Industry Act, 2021 (3) A retail gas supply licence authorises the gas retailer, to— (a) purchase marketable natural gas directly from a lessee, wholesale gas supplier or third party on a free market basis ; and (b) sell and deliver compressed or LNG to customers at any location in Nigeria on a free market basis. General duties of gas retailer. 147. In addition to conditions the Authority may impose under section 114 of this Act or that may be prescribed by regulation, a retail gas supply licence shall be deemed to be granted subject to the duty of the holder to— (a) develop and maintain a safe, efficient, reliable and economical service for the retailing of marketable natural gas ; (b) carry on its business in a manner that shall promote competition and avoid monopoly in the natural gas market in Nigeria ; (c) construct, operate and maintain its gas compression and liquefaction facilities in a safe, economical, and reliable manner taking into account any strategic plans formulated by the Authority ; (d) shut down its gas compression and liquefaction facilities in emergencies in order to carry out maintenance or respond to curtailment directives issued by the Authority ; (e) conduct its activities in a safe and reliable standard in compliance with prescribed environmental, health and safety-related regulations issued under this or any other Act ; (f ) publish the prices to be charged and to be paid by a person to whom the gas retailer sells natural gas in a manner to ensure adequate publicity unless the Authority direct otherwise ; and (g) comply with customer protection measures set out in sections 164, 165 and 166 of this Act. Grant of gas distribution licence. 148.—(1) Subject to sections 111 and 125 of this Act or regulations made under this Act, the Authority may upon approval of an application and payment of prescribed fees, grant and issue a qualified person gas distribution licence with rights to establish, construct, and operate a gas distribution system and to distribute and sell its natural gas without discrimination to consumers in a local distribution zone. (2) Notwithstanding the rights of a gas retailer under this Act, the holder of a gas distribution licence shall be entitled to sell natural gas to customers that are not wholesale customers. (3) The Authority shall, in considering an application for a gas distribution licence, take into account the economic case for the licence, including the potential demand for its use. Petroleum Industry Act, 2021 2021 No. 6 A 237 (4) The geographical limit of a local distribution zone shall be defined in the relevant gas distribution licence. (5) The rights and duties under a gas distribution licence shall be exclusive to the gas distributor for the validity period of the distribution licence. (6) A gas distribution licence may— (a) include provisions for providing third party access to the gas distribution network to a gas retailer or gas distributor on its own initiative ; and (b) permit access to a gas retailer to the gas distribution network under terms and conditions agreed to by the parties. (7) Subject to subsection (6), the gas distributor shall own the marketable natural gas in the gas distribution network. 149. A gas distributor shall undertake the activities contemplated by the gas distribution licence in a manner that complies with the following general obligations, to— (a) develop, operate and maintain an economical gas distribution network for the safe and reliable conveyance of natural gas ; (b) ensure a reliable and efficient distribution of natural gas to customers on request, provided that it is economical to do so ; (c) distribute and sell natural gas on request to a customer who is willing and able to pay for connection to the gas distribution network, subject to safety and network capacity constraints ; (d) conduct licenced activities safely and reliably in compliance with any law in force and any health and safety-related regulations issued by the Authority under this or any other Act ; (e) connect all customers within its local distribution zone in accordance with regulations if economically practicable to do so ; (f ) offer and publish terms and conditions of access to its gas distribution network as required and publish gas prices applicable to different classes of customers, which have been approved by the Authority ; (g) comply with customer protection measures set out in sections 164, 165 and 166 of this Act ; (h) prepare a distribution development plan, within one year after the effective date or after having been granted the licence, for connecting customers within its local distribution zone and any amendments as a result of economic or social developments in the zone for the consideration and approval of the Authority ; and (i) abstain from activities, which in the opinion of the Authority may prevent, restrict or distort competition. General duties of a gas distributor. Petroleum Industry Act, 2021 A 238 2021 No. 6 Rights of the gas distributor. 150. Subject to the provisions of this Act, the Authority may, in order to facilitate the conduct of its licenced activities, grant the gas distributor the right to— (a) enter a premises for the purpose of reading the meters, testing and maintaining metering equipment, disconnecting customers and to remove its meters ; and (b) recover, on the basis of an invoice, costs reasonably incurred in the provision of appropriate infrastructure, subject to any conditions imposed by the Authority to both the level and structure of a distributor’s charge, provided that reasonably incurred costs shall include any amount paid to the Authority as a licence fee. Conditions applicable to a gas distribution licence. 151. In addition to conditions the Authority may impose under section 114 of this Act or that may be prescribed by regulation, a distribution licence shall be deemed to be granted subject to the distributor— Arrangements for gas distribution. 152. A gas distributor shall consult stakeholders on the proposed distribution development plan and any amendments within its local distribution zone and consider all representations received. Domestic gas aggregation licence. 153.—(1) Subject to sections 111 and 125 of this Act, the Authority may upon approval of an application and payment of prescribed fees, grant and issue a qualified person a domestic gas aggregation licence. (a) conducting its licenced activities in a safe and reliable standard in compliance with prescribed management, health and safety related regulations issued under this or any other Act ; (b) having regard to the effect of its licenced activities on the environment and complying with the requirements for environmental protection, management, and restoration under this Act and any law in force ; and (c) marking, maintaining and securing the boundaries of the distribution pipelines constructed or other distribution infrastructure as prescribed. (2) The duration of the domestic gas aggregation licence shall be for a period of two years effective from the date of the grant of the licence. (3) The domestic gas aggregation licence may be renewed by the Authority for further period of two years in each instance until the attainment of liquidity in the domestic gas market pursuant to the criteria of section 167 (3) of this Act, whereupon gas aggregation shall cease and the domestic gas aggregation licence shall be terminated by the Authority. (4) The board of domestic gas aggregator shall determine the fees for the services of the domestic gas aggregator and the fees shall be paid by the producer clients and customer clients in order to ensure self-financing of the domestic gas aggregator. Petroleum Industry Act, 2021 2021 No. 6 154. The domestic gas aggregator shall— (a) support the implementation of the domestic gas delivery obligation ; (b) implement a natural gas management model, through which the demand and supply of natural gas for use in the strategic sectors shall be monitored ; (c) operate a nomination and balancing mechanism for equitable curtailment of natural gas deliveries in cooperation with the Authority, whenever demand and supply expediencies require ; (d) ensure transparency of dealing between natural gas suppliers and wholesale customers of the strategic sectors ; (e) conduct its operations in a business-like and transparent manner and shall not engage in any anti-competitive behaviour and practices ; (f ) abstain from activities, which in the opinion of the Authority may prevent, restrict or distort competition ; (g) establish an escrow account into which customer clients shall contribute their payments for the marketable natural gas received and from which the domestic gas aggregator shall pay the producer clients for their supplies of natural gas under this Act ; and (h) do other things as are necessary or incidental to the carrying out of its functions and duties under this Act. 155.—(1) The domestic gas aggregator shall be a not-for-profit company limited by guarantee established under the Companies and Allied Matters Act. (2) The company under subsection (1) shall not be a company that is controlled by licensees or lessees of upstream petroleum operations or by wholesale customers or is an affiliate of such entities, provided that ownership of the company may be by a combination of licensees or lessees, wholesale customers and other interested parties, such as licensees of gas transportation pipelines and gas transportation networks. A 239 Functions of the domestic gas aggregator. Establishment of the aggregator. Act No 3, 2020. 156. The domestic gas aggregator shall issue a gas purchase order to Gas a producer client where a customer client requires a specific volume of purchase orders. marketable natural gas, which is included in the domestic gas demand requirement under section 173 of this Act, provided, however, that where the producer client and customer client have entered into a gas purchase and sale agreement, the domestic gas delivery obligation shall be dealt with pursuant to such agreement which may continue to use the escrow account mechanism as provided for under section 154 (g) of this Act and where such agreement is concluded under section 110 (2) of this Act, there shall be no further involvement of the aggregator. Petroleum Industry Act, 2021 A 240 2021 No. 6 Price conditions of gas purchase orders. 157. The gas purchase order under section 156 of this Act and the escrow mechanism under 154 (g) of this Act shall be based on the prices for marketable natural gas established by the Authority under section 167 of this Act. Wholesale customers. 158.—(1) The Authority shall, following consultations with interested stakeholders, issue regulations— (a) defining the class or classes of customers that shall constitute eligible wholesale customers under this Act, and (b) specifying the qualifying criteria for the classification : Provided that the regulations may be amended from time to time to facilitate the introduction of competition in supply and any amendment of the regulations resulting in a change of the class of customers shall not affect the rights and obligations of parties under natural gas supply contracts entered into prior to such amendment. (2) Wholesale customers shall be entitled to secure marketable natural gas or raw gas from any wholesale gas supplier or lessee, subject to section 173 (3) of this Act. Trading and settlement of wholesale gas. 159.—(1) The Authority shall develop arrangements for the safe and efficient trading of wholesale gas, where it determines that there is need for formal arrangements for the trading of wholesale gas. (2) The Authority shall, where required, make regulations under subsection (1) for the trading and settlement of wholesale gas in consultation with industry participants and interested stakeholders. Gas network code. 160.—(1) The operation of a gas transportation network shall be in accordance with the existing network code issued by the Government. (2) The Authority may in consultation with stakeholders in midstream and downstream gas operations modify the network code or create other network codes for common carrier operations. (3) The Authority shall make copies of the gas network code available to interested parties upon payment of prescribed fees. Access related to midstream and downstream gas operations. 161.—(1) A person shall be permitted access to an open access gas transportation pipeline or a gas transportation network for the purpose of having marketable natural gas transported to points of consumption subject to compliance with the prescribed terms and conditions for access stated in the gas network code. Petroleum Industry Act, 2021 2021 No. 6 A 241 (2) The gas network code shall set out standard terms and conditions for connection to, interconnection with access and use of the gas transportation network. (3) Where a gas transportation pipeline is isolated from the main gas transportation network, the Authority shall develop separate terms of access for the isolated gas transportation pipeline. (4) The Authority may develop special terms for third party access to a gas distribution network. 162.—(1) Where open access applies, open access to the gas transportation pipeline or gas transportation network shall be— (a) provided on a non-discriminatory basis between system users with similar characteristics under section 116 of this Act ; (b) provided in respect of any available capacity, where the capacity is not subject to a previous contractual commitment ; (c) provided in accordance with and governed by the terms and conditions of the network code approved by the Authority, where applicable ; (d) provided on the condition that the applicant for access is or becomes a party to and undertakes to comply with the applicable network code ; and (e) subject to the pricing principles set out in section 170 of this Act. Conditions for the provision of open access in relation to gas operations. (2) Connection agreements may be entered into between— (a) gas transportation pipeline owners and gas transportation network operator ; (b) a gas distributor and the gas transportation network operator, where a gas distribution network connects to the main transportation network ; or (c) a supplier and a transportation pipeline owner or transportation network operator. 163. The Authority may mediate in disputes in respect of third party access. Disputes in relation to access. 164.—(1) The Authority may, to protect the interests of customers, issue regulations requiring suppliers, gas distributors and petroleum product distributors to— Customer protection. (a) publish their terms of supply or distribution including tariffs, other than for negotiated tariffs under section 122 (4) of this Act ; (b) establish or to facilitate the establishment of a forum at which customers are able to express their views and raise concerns ; A 242 2021 No. 6 Petroleum Industry Act, 2021 (c) formulate and adhere to standards of performance as are, in its opinion, necessary to ensure the safety, reliability and quality of supply and distribution services to customers and set penalties, pursuant to regulations, for failure to comply ; (d) prepare and submit reports to the Authority, at least on an annual basis, indicating their performance levels and status of their operations in respect of licenced activities at such times as the Authority may by regulation or in their respective licences prescribe ; and (e) develop and adhere to customer service codes, setting out the practices and procedures to be followed in the conduct of specified licenced activities, which may include— (i) the installation, testing, maintenance and reading of meters, (ii) fault repairs and response to customer emergencies, (iii) the connection and disconnection of customers, (iv) responding to customer complaints and complaint resolution, (v) Billing and invoicing, (vi) the extension of payment and credit facilities, (vii) the provision of information to customers and the use and protection of customer information, and (viii) the establishment of special services for economically or socially disadvantaged customers. (2) The customer service codes shall be approved by the Authority prior to publication and may be reviewed at intervals as may be considered necessary by the Authority. (3) The customer service codes shall be made available to all customers upon request and published on the website of the Authority. (4) The Authority shall notify or by regulation require licensees to notify customers of the customer service codes that shall be adhered to by licensees. (5) The Authority shall, in developing customer protection regulations,— (a) consult with suppliers, gas distributors, petroleum product distributors and interested stakeholders ; and (b) take into account existing procedures, practices and standards issued by the Federal Competition and Consumer Protection Commission. Provision of service to customers. 165. The Authority shall, at its discretion and at such time or times as it deems appropriate, designate distributors of last resort and suppliers of last resort to provide services to customers— Petroleum Industry Act, 2021 2021 No. 6 A 243 (a) where an existing gas distributor for a local distribution zone, a petroleum product distributor or a supplier becomes insolvent, is unable to provide licenced services or has had its licence suspended or revoked, (b) where the gas distributor for a local distribution zone or supplier refuses or fails to fulfil the terms of its licence to distribute or supply natural gas or petroleum product to customers, and (c) in such other circumstances as the Authority may deem appropriate: Provided that, in each case, any reasonable additional costs associated with the obligation to act as distributor or supplier of last resort shall be recoverable through appropriate charging arrangements agreed with the Authority. 166. Where the designation of a supplier or distributor of last resort requires the transfer of customers from one licensee to another, the Authority shall prepare, or require the applicable supplier or distributor of last resort to prepare— Transfer of customers. (a) procedures to secure the effective transfer of customers ; and (b) a statement of any costs reasonably incurred in undertaking the transfer, which if approved by the Authority, shall be recoverable through regulated charges. 167.—(1) The Authority shall, in accordance with this section and for each year, determine the domestic base price under the Third Schedule to this Act, for the purpose of determining the prices for the power sector, commercial sector and gas based industries. (2) The Authority shall continue to determine the prices referred to under subsection (1), if in its opinion, the control of prices for natural gas for the strategic sector is required. (3) The price control and the corresponding role of the domestic gas aggregator shall not be required, where the— (a) entire domestic gas demand requirement under section 173 (2) is covered by contracts under sections 110 (2) and 173 (3) of this Act ; or (b) domestic market for natural gas is largely characterised by free market based contracting for natural gas between willing buyers and willing sellers, based on criteria established by the Authority in consultation with the stakeholders and at such time the provisions of subsections (4), (5), (6) and (7) and section 168 shall no longer be applicable and the criteria under this subsection may include that certain classes of wholesale customers, but not all, of the strategic sectors will no longer be subject to price controls as part of an ongoing process towards full free market conditions. Natural gas prices for the strategic sectors and gas distributors. Third Schedule. A 244 2021 No. 6 Petroleum Industry Act, 2021 (4) The aggregate gas price for a month shall be the price calculated based on the procedures established by the domestic gas aggregator on the basis of the prices determined by the Authority under subsection (1). (5) The price of marketable natural gas applicable to the power sector shall be the domestic base price at the marketable natural gas delivery point. (6) The price of marketable natural gas applicable to the commercial sector shall be the domestic base price at the marketable natural gas delivery point plus US $0.50 per MMBtu. (7) Gas distributors shall not be part of the strategic sectors and shall negotiate the supply and pricing of their natural gas directly, provided that the applicable price for gas distributors for the marketable natural gas at the marketable gas delivery point shall not exceed that of the commercial sector under subsection (6). (8) Where applicable, wholesale gas suppliers, the wholesale customers of the strategic sectors and gas distributors shall pay for the transportation cost of the marketable natural gas from the marketable natural gas delivery point to the facilities of the wholesale customers. (9) The wholesale gas suppliers, wholesale customers of the strategic sectors and gas distributors shall, for the purpose of transportation, have the option to— (a) use the gas transportation network applicable to their geographical areas ; or (b) obtain a gas transportation licence in order to transport their natural gas connecting to the gas transportation network, another existing gas transportation pipeline or directly to a marketable natural gas delivery point. (10) Each producer client shall, for any month, receive from the escrow account of the domestic gas aggregator an amount that is equal to the aggregate gas price multiplied by the customer client volume that was paid for such producer client in such month by the customer client. Gas based industries gas price. Fourth Schedule. 168.—(1) Subject to the provisions of section 167 (3) of this Act, the gas price for the gas based industries shall be determined by the pricing principles specified in the Fourth Schedule to this Act. (2) The floor price for the gas based industries shall be US $0.90 per MMBtu. (3) The ceiling price shall be the domestic base price applicable for any particular year. Petroleum Industry Act, 2021 2021 No. 6 (4) The prices determined in the Fourth Schedule to this Act shall be prices at the marketable gas delivery point from where transport costs need to be added for delivery to the respective gas based industries. A 245 Fourth Schedule. (5) The Authority may by regulation adjust the price mechanism to add other gas based industries in line with market realities. 169.—(1) Where the Authority determines that— (a) a particular licenced activity is a monopoly service, (b) competition has not yet developed in the market to such an extent as to protect the interests of customers, or (c) a particular licensee is a dominant provider, Power to regulate and review prices. the Authority shall regulate the prices charged by licensees in respect of the activities, in a manner consistent with its functions under this Act and with the pricing principles set out in section 170 of this Act. (2) The Authority shall undertake periodic pricing methodology reviews, provided that the pricing methodology review shall not affect arrangements entered into or approvals given for the development of a gas infrastructure or utilisation project prior to the effective date. (3) The Authority shall consult with licensees, industry participants and stakeholders before undertaking a pricing review or establishing a methodology for regulating prices and revenues earned by licensees providing monopoly or dominant services. 170. Subject to the provisions of this Chapter, the Authority shall, in the exercise of its powers to regulate prices charged by licensees, be guided by the following principles— (a) marketable natural gas prices shall be disaggregated into the component elements of the supply chain including the costs of wholesale gas, tariffs for gas processing, tariffs for transportation pipelines for natural gas, distribution and supply ; (b) the prices charged for each licenced activity shall reflect the costs incurred in the efficient provision of that activity ; (c) prices charged shall permit a reasonable return for licensees on their investments ; and (d) prices shall not discriminate between customers with similar characteristics, such as similar size or a similar consumption profile. Pricing principles in relation to gas. A 246 Public service obligations related to policy issues. Public service levy. 2021 No. 6 Petroleum Industry Act, 2021 171. The Authority may issue regulations imposing public service obligations on licensees in relation to matters including— (a) security of supply ; (b) economic development and the achievement of wider economic policy objectives ; (c) environmental protection ; and (d) health and safety. 172.—(1) The Authority shall, by regulation, provide for the recovery of any additional costs incurred in complying with the public service obligations through a public service levy, which may be imposed on customers, provided that it would, in the opinion of the Authority, be in the wider public interest. (2) The amount of, and mechanism for the collection and remittance of, the public service levy imposed on each customer shall be set out in the regulations contemplated by subsection (1). Domestic gas demand requirement. 173.—(1) The Authority shall, prior to the 1st of March of each calendar year, determine the domestic gas demand requirement and inform the Commission of this requirement. (2) Subject to subsection (3), the domestic gas demand requirement shall be the total amount of marketable natural gas required for all wholesale customers of the strategic sectors. (3) Each wholesale customer of the strategic sectors shall have the right to negotiate its own supply contracts directly with lessees or suppliers and where the wholesale customer is of the view that the contracts are satisfactory for its requirements, it shall inform the— (a) Authority that there is no need to be a customer client of the domestic gas aggregator ; and (b) Commission of the lessees from which the required marketable natural gas has been obtained. PART V—ADMINISTRATION OF MIDSTREAM AND DOWNSTREAM PETROLEUM LIQUIDS OPERATIONS Activities requiring a licence for midstream and downstream petroleum liquids operations. 174.—(1) Except in accordance with an appropriate licence issued by the Authority, a person shall not undertake the following activities with respect to midstream petroleum liquids operations— (a) establish, construct or operate a terminal or other facility for the export or importation of crude oil or petroleum products ; (b) establish, construct or operate a crude oil refinery ;