Oil & Gas :- The Assignment/Transfer/Lease Of Oil and Gas Licenses/Permits In Nigeria – All You Need To Know
For many Oil & Gas start-up businesses, it is usually easier to lease or carry out assignments/transfers of already existing businesses in the Nigerian oil and gas industry. It is however worthy to note that such license/permit transfers/leases and assignments are also regulated at the Midstream & Downstream oil sectors by the Nigerian Midstream & Downstream Petroleum Regulatory Agency (NMDPRA) pursuant to the Petroleum Industry Act.
This article will be looking at the regulatory provisions governing license assignment, transfer and 3rd party leasing in the Nigerian Oil & Gas sectors as prescribed by the NMDPRA.
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What are the objectives of the NMDPRA regulations in this regard?
– To establish a procedure for the assignment or transfer of oil & gas licenses or permits by the license/permit holders.
– To prescribe fees for such license/permit assignments or transfers.
– To provide sanctions & administrative penalties for failure to comply with these regulations.
What is the applicability scope of the NMDPRA regulations on license assignment or transfers?
The regulations shall apply to activities connected with the assignment or transfer of licenses or permits granted by the NMDPRA for Midstream & Downstream petroleum operations.
What is the exact nature of license assignments or transfers of licences and permits as permitted by the NMDPRA?
Acceptable transfers or assignments of licenses and permits as permitted by the NMDPRA include :-
– Assignments or transfers by mergers of 2 or more companies.
– Assignments or transfers by acquisition of a company or asset.
– Assignments or transfers to a company in a group of which the transferor is a member & is to not made for the purpose of reorganization in order to achieve greater efficiency and acquire resources for effective petroleum operations.
– Assignment or transfer to a new company.
-Assignment or transfer by testamentary instruments (wills).
The NMDPRA may by notice, determine any other category of assignment or transfer of license & permit.
What is the provision of the NMDPRA on change of names by license holders?
– A license or permit holder shall notify the NMDPRA prior to a change of name arising from a corporate restructuring or rebranding.
– Where the NMDPRA has no objection to the change of name, the license or permit holder shall :-
- Apply for a new license or permit in the new name.
- Return the license or permit in the previous name to the NMDPRA for cancellation.
- Pay prescribed fees for such change of name on a license or permit.
– A change of name shall not constitute an assignment or transfer of license for the purpose of these regulations.
What are the provisions of the NMDPRA for a notification of an intention to assign or transfer a license or permit?
– A transferor who intends to assign of transfer a license or permit shall, prior to the assignment or transfer, notify the NMDPRA of its intention to undertake such assignment or transfer.
What are the provisions of the NMDPRA on applications for assignments or transfers of licenses by transferees?
– Where the NMDPRA makes a decision on whether to grant an application to transfer/assign a license/permit, the transferee shall :-
- Apply for an assignment or transfer of the license or permit to its company.
- Submit a copy of the title documents, which shall be certified by a court of competent jurisdiction.
- Where required, make presentations to the NMDPRA on its technical and financial capability to operate such facility.
- Provide any other information as may be required.
- Pay prescribed fees.
What are the provisions of the NMDPRA on grants of consent to assign or transfer licenses and permits?
– The NMDPRA shall inform an applicant in writing of Its consent to approve or refusal of the applicant within 90 days from the date the application was received.
– Where an application is refused -an appeal or further representations can be made within 21 days of such refusal being communicated.
What are the provisions of the NMDPRA on prohibitions, contraventions and penalties?
– Assignments or transfers are prohibited without NMDPRA consent.
– Contraventions of any provisions of the NMDPRA regulations on license assignments or transfers will earn a fine of :-
- $100,000 per license for Midstream processing facilities, installations, terminals and pipelines. In addition, any permit granted to the offending party may be revoked, cancelled or suspended.
- $50,000 or its Naira equivalent per license for blending facilities & petroleum storage facilities . This is in addition to the suspension, revocation, or cancelation of the license or permit.
- 2 Million Naira per license for Oil & Gas retail outlets in addition to license/permit revocation, cancellation or suspension.
What are the applicable processing fees for license/permit transfers or assignments?
- Petrol Liquids or Gas retail outlets :- 500 Thousand Naira
- Depots – 10 Million Naira
- Blending plants, waste recycling plants, Bitumen Emulsion plants, refilling plants or thermal desorption units – 3 Million Naira
- Hydrocarbon processing plants (Refineries, Petrochemical and Gas processing facilities)
– $10,000 for capacities less than 1KBPSD or less than 6mmscfd
– $50,000 for capacities between 1,000 & 30,000 BPSD, or between 6mmscfd & 180mscfd
– $150,000 for capacities above 30,000 BPSD or above 18mscfd
- Pipelines – $500 per Kilometer
- Pipeline distribution network – $200 per Km
- Pipeline transportation network – $250 per Km
- Terminals – $200,000.00
- CNG Compression stations/small scale Liquefied Natural Gas(LNG) Installations – 500,000.00 Naira
Note that an alternative processing fee of 5% of the license value will apply if it is higher numerically.
How To Secure A Wholesale Petroleum Liquids Supply Licence In Nigeria
Wholesale Petroleum Liquids Supply Licenses are issued in Nigeria pursuant to the Petroleum Industry Act and through the Nigerian Midstream & Downstream Petroleum Regulatory Agency (NMDPRA) .
Such a license is issued upon approval of an application and payment of the prescribed fees.
This article will not focus on the requirements for procuring wholesale petroleum liquids supply licenses in Nigeria.
Who are eligible applicants for wholesale petroleum liquids supply licenses in Nigeria?
– Lessees
– Crude oil refining companies
What are the information requirements regarding applicant company information for wholesale petroleum liquids supply licenses?
– Copies of the certificate of incorporation and memorandum and articles of association (not applicable to lessees).
– A company tax clearance certificate.
– A completed application form.
– Proof of technical competence – company organogram & staff list.
– List & particulars of shareholders (not applicable to lessees).
– List of particulars of directors.
– Authorized representative.
– Other supporting documents (If any).
What are the commercial obligations for this license category?
– Evidence of payment for license and processing fees
– 3 years financial projections, to include all recurrent & capital costs.
– 3 years audited financial statements
– Evidence of valid economic viability certificate issued by the NMDPRA.
– A list of wholesale customers with a copy of their supply agreement & lessee/3rd party suppliers (where applicable).
– Commercial allowable for production.
What are the technical obligations required for this license category?
– Evidence of license, permit or approval issued by the NMDPRA such as but not limited to PPL, PML, MDOGISP,etc.
– Previous year annual production data (volume) and current annual projection.
– Technical allowable for production.
– Copy of clearly defined standard operating procedure for the company.
– Evidence of license to operate.
– Previous quarter performance record (for license renewals).
– Submission of quarterly commercial record (for renewal).
– Submission of quarterly commercial activity report.
What are the applicable fees for wholesale petroleum liquids supply licenses in Nigeria?
- Wholesale Petroleum Liquids (Crude Oil) Supply for volumes less than 50,000 BBLs
Fee :-$1 per BBL
- Wholesale Petroleum Liquids (Crude Oil) Supply for volumes of 50,000-200,000 BBLs
Fee :- $0.85 per BBL
- Wholesale Petroleum Liquids (Crude Oil)Supply Volumes around 200,000 BBLs
Fee :- $0.5 per BBL
- Wholesale Petroleum Liquids (Crude Oil) Supply
Fee :- 50 Kobo per liter
How To Secure A Wholesale Gas Supply License In Nigeria
The Petroleum Industry Act empowers the pursuant regulations that grant the Nigerian Midstream & Downstream Petroleum Regulatory Agency (NMDPRA) the powers to grant & issue qualified persons licenses to engage in wholesale gas supply licenses upon approvals of applications & payment of prescribed fees.
This article will be focused on the provisions for requirements needed to procure Wholesale Gas Supply Licenses in Nigeria.
Who are eligible applicants for this license as pointed out by the NMDPRA?
a). Lessees
b). Third party companies
c). Independent companies seeking to take natural gas in wholesale volume.
Is it possible for smaller 3rd party companies to lease or seek transfers of such licenses?
Yes, smaller or 3rd party companies can lease wholesale gas supply licenses subject to NMDPRA approval.
What are the required pieces of corporate information for wholesale gas supply licenses as prescribed by the NMDPRA?
– A copy of the applicant’s Certificate of Incorporation.
– Copies of the memorandum and articles of association (MEMART) of the applicant.
– Company tax clearance certificate.
– A completed application form.
– Proof of technical competence – company organogram.
– List of particulars of shareholders.
-List of particulars of directors.
– Authorised representative.
– Staff list.
– Other supporting documents.
What are the required financial obligations for wholesale gas supply licenses?
– Payment of license & processing fees.
– 3 year-financial projections, to include all recurrent & capital costs.
– 3-year audited financial statements.
What are the technical obligations for wholesale gas supply licenses in Nigeria?
– Evidence of license, permit or approval issued by NMDPRA such as but not limited to PPL, PML or OGISP grants.
– Submission of natural gas production & supply plan (NGPSP) pursuant to the Petroleum Industry Act, not later than 31st March every year.
– The wholesale gas supply license applicant is required to submit a list of prospective wholesale customers and lessee/3rd party supplies (where applicable).
– Clearly defined standard operating procedures for the company.
– Compliance with the PIA & all necessary regulations & guidelines issued by the NMDPRA.
What are the applicable license fees for Wholesale gas supply as prescribed by NMDPRA?
- Wholesale Gas Supply Licence GS-1
– Description (Supply Volume):- Above 500 mmscf/d
Validity period of license :- 2 years
Statutory fees :- $2,500.
- Wholesale Gas Supply Licence GS-2
Supply Volume :- 500-2mscf/D
License Validity Period :- 2 years
Statutory Fee :- $12,500
- Wholesale Gas Supply Licence GS-3
Supply Volume :- Below 25 mmscf/D
License validity period :- 2 years
Processing fee :- $10,000
Statutory Fee :- $5,000
It should be noted that applicable fees for 3rd party companies & independent companies shall be calculated to half the stipulated fees for any category except GS-3.
Also, calculated applicable fees for 3rd party companies & independent companies shall not be less than stipulated GS-3 applicable fees.