Part IV – Downstream Licensing

Part IV provides for the licensing of downstream activities, which for the purpose of the Bill includes downstream petroleum products as well as natural gas.

Licence Grant

Unlike the Petroleum Act which vests such powers in the Minister, the downstream licensing authority under the PIB is the Downstream Petroleum Regulatory Agency, and it has the power to grant amongst others, the following categories of downstream licences based on standard conditions as specified in the licences:

  • Constructing and operating a process plant including those for gas liquefaction;
  • Constructing and operating a petroleum transportation pipeline for crude oil or gas or condensate or petroleum products;
  • Constructing and operating a petroleum transportation network;
  • Constructing and operating a petroleum distribution network;
  • Undertaking the supply of downstream products or natural gas;
  • Owning and running a downstream products or natural gas processing or retail facility.

The Agency shall also grant licences for the utilization of all chemicals used for downstream petroleum operations including chemicals used in the processing, distribution and storage of petroleum products in the Nigeria. The Agency also has the power to modify, renew or extend licences issued by it. It should however be noted that the Minister is vested with the power to make regulations governing issuance of licences and other downstream operations on the advice of the Agency. Breach of any of the conditions of a licence, regulation or provisions of the Bill or any of the other grounds for revocation as stipulated in the Bill also gives the Agency a right to suspend or revoke such licence.

Assignment & Surrender

Similar to previous PIB drafts, assignments and transfer of rights or obligations in a licence shall not be made without prior written consent of the Agency. A licensee may surrender its licence upon application to the Agency for any of the permissible reasons enumerated in the Bill. However, where such licensee has commenced activities and has ongoing operations, it would be required to give the Agency at least twelve (12) months’ written notice of its intention to surrender its licence.

Contravention and Enforcement of Licence Conditions

Where the Agency notices a breach or intending breach of any licence condition, it may issue a notice to the licensee and interested parties for further representations after which it may, based on its findings issue an enforcement order and appropriate penalties.

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