HIGHLIGHTS OF THE NIGERIAN PETROLEUM INDUSTRY BILL 2012


  • Unlike the silence of the extant Petroleum Act on gas discoveries, the PIB clearly provides that upon the completion of the appraisal programme by the holder of a Prospecting Licence, the licensee has the option (amongst others) of declaring a significant gas discovery and therefore be entitled to retain the relevant discovery area for a retention period of not more than ten (10) years.[1]

  •  With respect to gas flaring, there are no clear and specific timelines provided for a total flare-out date. Section 275 of the PIB provides that “[n]atural gas shall not be flared or vented after a date ('the flare-out date') to be prescribed by the Minister in regulations made pursuant to this Part, in any oil and gas production operation, block or field, onshore or offshore, or gas facility such as, processing or treatment plant, with the exception of permits granted under … this Act”. This therefore presupposes that gas flaring may be permitted under certain circumstances.

  •   It is also further provided in the PIB that "[t]he oil and gas operators with flared gas resources shall within six months of the commencement of this Act categorize all of their flared gas resources (daily flare quantity, reserve, location, composition) and submit this data along with gas utilization plans to the Inspectorate for the gas they intend to utilize before the flare out date as stated in section 275 of this Act.”[2] The Minister is empowered to grant a permit, of not more than one hundred (100) days or such longer period as may be approved by the Minister, to flare or vent gas in cases of start-up, equipment failure, shut down, safety flaring or due to the inability of a gas customer to offtake gas.


  • To emphasize the importance of the Nigerian content regime, Section 179(3)(d) of the PIB provides that one of the conditions for the approval[3] of a Prospecting Licensee’s Field Development Plan (“FDP”) further to a commercial discovery is an approved Nigerian content plan in line with relevant legislation. In other words, without such a Nigerian content plan which is one of the prerequisites to the UPI giving its approval to the FDP, the Licensee shall not commence the drilling of wells during the initial or renewal exploration periods, nor carry out the appraisal work in respect of any appraisal work programme submitted to the UPI further to a commercial discovery of petroleum.

Profits of each accounting period of any company engaged in upstream petroleum operations[2] will now be subject to Nigerian Hydrocarbon Tax (“NHT”)[3] instead of the current Petroleum Profits Tax (“PPT”). The provisions on NHT are largely a replication of the extant provisions on PPT stipulated inthe PPTA. The innovations of the proposed NHT regime are..."

FOR A FULL SYNOPSIS ON THE PROVISIONS OF THE NEW PIB PLEASE CLICK ON THE SUB-HEADINGS ABOVE OR ON THIS LINK...... 


[1] Administered by the Federal Inland Revenue Service (“FIRS”), subject to the authority, direction, and control of the Minister of Petroleum.
[2] Upstream petroleum operations comprises upstream gas operations and upstream crude oil operations. “upstream crude oil operations” means the winning or obtaining of crude oil in Nigeria by or on behalf of a company on its own account for commercial purposes and shall include any activity or operation related to crude oil that occurs up to fiscal sales point or transfer to the downstream sector, while "upstream gas operations" means the winning or obtaining of natural gas in Nigeria by or on behalf of a company on its own account for commercial purposes and shall include any activity or operation related to natural gas, including but not limited to the treatment of gas, that occurs up to the fiscal sales point or transfer to the downstream sector.
[3] See generally Part VIII (A) of the PIB which comprises Sections 270 – 353.

[1] Section 178(11) & (12), PIB.
[2] Section 276(1), PIB
[3] Other conditions for the FDP approval are health, safety and environmental standards, acceptable decommissioning and abandonment plan and an approved environmental management plan.

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