
Under the Petroleum Act (PA), there were 5 major grounds on which an Oil Prospecting Licence (OPL) could be revoked.
Nigeria
Energy and Natural Resources
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Under the Petroleum Act (PA), there were 5 major grounds on
which an Oil Prospecting Licence (OPL) could be revoked. Following
the enactment of the Petroleum Industry Act (PIA) 2021, the grounds
for revocation of a Petroleum Prospecting Licence (hereinafter
referred to as “PPL” or the “Licence”) have
been expanded to include circumstances not withtin the
contemplation of the PA. In the subsequent paragraphs, we shall
examine these modifications.
Innovations Introduced by the PIA
- The nationality of the management or place of incorporation of
the controlling company of the Licensee is no longer a ground for
revocation. - Although the Minister retains the power to revoke a License for
failure to furnish reports and data required by law, this can only
be exercised after the Licensee has been issued a written notice of
such default by the Nigerian Upstream Petroleum Regulatory
Commission (the “Commission”). - It is no longer sufficient for the Licensee to carry on
operations continuously, in a business-like manner and according to
good oilfield practice, the Minister now possesses power to revoke
a Licence where petroleum operations within the Licence area do not
meet international industry standard amongst others. - The PIA makes express provision for the assignment, novation or
transfer of any interest in a PPL in contravention of the PIA to be
a ground for revocation. This was impliedly provided for in the
Petroleum Act by the combined reading of Paragraph 14 and 25(1)(b)
of the First Schedule to the PA.
Other grounds for revocation introduced by the PIA
include where the Licensee:
- interrupts production without justification for over a period
of 180 days or for a period as specified in the licence or approved
field development plan, - obtained an interest in the licence through false
representation or in contravention of corrupt practices and money
laundering laws, - is declared insolvent or bankrupt by a competent court or is
liquidated, in each case except as part of a solvent plan or scheme
of reorganisation, amalgamation or arrangement, - has failed to comply with environmental obligations prescribed
under the applicable law or the licence, - is owned, wholly or in part, directly or indirectly or is
controlled by a former or serving public official or member of the
Government, who obtained interest in the licence other than as
permitted by applicable law, - fails to submit a field development plan and work commitment as
prescribed by the PIA, - fails to abide by any expert determination, arbitral award or
judgement arising from the dispute resolution provisions contained
in the licence or the PIA, - fails to comply with domestic crude oil supply obligations or
domestic gas delivery obligations imposed by the PIA or any
subsidiary Regulation, - fails to comply with host communities’ obligations imposed
by the PIA.
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Originally published November 27, 2023
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