New – PIAB proposes new upstream licensing system

The Petroleum Industry Administration Bill recently published by the National Assembly proposes a new upstream petroleum licensing system. Under the Petroleum Act, the Petroleum Minister may award three types of licences  – the Oil Exploration Licence (OEL), the Oil Prospecting Licence (OPL) and the Oil Mining Lease (OML). The PIAB has reduced these to two – the Exploration Licence (EL), which is similar to the current OEL and the Petroleum Licence (PL), which is a combination of the OPL & the OML.  The Commission may award the proposed PL awarded for a term of 25 – 30 years (depending on the terrain). It is divided into two phases – the Exploration Period which is between 5 – 10 years (again depending on the terrain) and the Production Period of 20 years.

In the Exploration Period, the licensee must carry out a minimum work obligation (set by the Commission) and will only progress to the Production Period after the minimum work obligation has been completed, a field development plan has been approved and the initial relinquishment as required by the Bill has been done. The Bill also provides for an additional relinquishment period.

More analysis to follow.

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