16 May 2018

Nigeria: NNPC Seeks Split of Petroleum Licences

The Nigerian National Petroleum Corporation (NNPC) has recommended the splitting of petroleum licences into two components for prospecting and production phases under the draft Petroleum Industry Administrative legislation currently before the National Assembly.

The Group Managing Director of the corporation, Dr. Maikanti Baru, made the recommendation at the public hearing organized by the House of Representatives' Committee on the Petroleum Industry Administrative Bill (PIAB), Petroleum Industry Fiscal Bill (PIFB) and the Petroleum Industry Host Community Bill (PIHCB) in Abuja on Wednesday.

According to a statement by NNPC's spokesman, Ndu Ughamadu, the GMD said the proposed split would prevent a situation where operators would sit perpetually on oil acreages.

The NNPC's recommendation under the PIAB seeks a break up of Petroleum Licence into Petroleum Exploration Licence (PEL) - to prospect for petroleum, while the second component to be known as Petroleum Lease (PL), should be created to cover the production phase to search for, win, work, carry way and dispose of petroleum.

The corporation also pushed for a re-think of the duration of licences as proposed in the PIAB which stipulates initial duration of 25 years for onshore and shallow water petroleum licence and 30 years for deep water and frontier acreages.

NNPC, however, proposed five years prospecting licence for onshore and shallow fields and a duration of 10 years for deep offshore and frontier basins.

It recommended 20 years production lease for onshore and shallow fields as well as deep offshore and frontier basins.

The corporation noted that only the production lease period should be renewed for a period not exceeding 20 years.

Nigeria

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