FIRST SCHEDULE
(Section 2(3).) - OIL EXPLORATION LICENCES, OIL PROSPECTING LICENCES AND OIL MINING LEASES
Oil exploration licences
1.An oil exploration licence shall apply to the area specified therein which may be any area on which a premium has not been placed by the Minister, and shall authorise the licensee to undertake exploration for petroleum in the area of the licence, excluding land in respect of which the grant of an oil prospecting licence or oil mining lease has been approved by the Minister and land in respect of which an oil prospecting licence or oil mining lease is in force.2.An oil exploration licence shall not confer any exclusive rights over the area of the licence, and the grant of an oil exploration licence in respect of any area shall not preclude the grant of another oil exploration licence or of an oil prospecting licence or oil mining lease over the same area or any part thereof.3.An oil exploration licence shall terminate on 31 December next following the date on which it was granted, but the licensee shall have an option to renew the licence for one further year if(a)he has fulfilled in respect of the licence, all obligations imposed upon him by this Act or otherwise(b)the Minister is satisfied with work done and the reports submitted by the licensee in pursuance of the licence, and(c)an application for renewal has been made at least three months before the date of expiry of the licence.4.An oil exploration licence shall not confer any right to the grant of an oil prospecting licence or an oil mining lease.Oil prospecting licences
5. The holder of an oil prospecting licence shall have the exclusive right to explore and prospect for petroleum within the area of his licence.
6. The duration of an oil prospecting licence shall be determined by the Minister, but shall not exceed five years (including any periods of renewal).
7. The holder of an oil prospecting licence may carry away and dispose of petroleum won during prospecting operations, subject to the fulfilment of obligations imposed upon him by or under this Act (including any special terms or conditions imposed under paragraph 34 of this Schedule) or by the Petroleum Profits Tax Act or any other law imposing taxation in respect of petroleum.
Oil mining leases
8. An oil mining lease may be granted only to the holder of an oil prospecting licence who has
(a)satisfied all the conditions imposed on the licence or otherwise imposed on him by this Act, and(b)discovered oil in commercial quantities.9. For the purposes of paragraph 8 of this Schedule, oil shall be deemed to have been discovered in commercial quantities by the holder of an oil prospecting licence if the Minister, upon evidence adduced by the licensee, is satisfied that the licensee is capable of producing at least 10,000 barrels per day of crude oil from the licensed area.
10. The term of an oil mining lease shall not exceed twenty years, but may be renewed in accordance with this Act.
11. Subject to this Act and any special terms or conditions imposed under paragraph 34 of this Schedule, the lessee of an oil mining lease shall have the exclusive right within the leased area to conduct exploration and prospecting operations and to win, get, work, store, carry away, transport, export or otherwise treat petroleum discovered in or under the leased area.
12.
(1)Ten years after the grant of an oil mining lease, one half of the area of the lease shall be relinquished.(2)Paragraph 18 of this Schedule shall apply to the relinquished area.13.
(1)The lessee of an oil mining lease shall be entitled to apply in writing to the Minister, not less than twelve months before the expiration of the lease, for a renewal of the lease either in respect of the whole of the leased area or any particular part thereof, and the renewal shall be granted if the lessee has paid all rent and royalties due and has otherwise performed all his obligations under the lease.(2)Paragraph 12 of this Schedule shall not apply in relation to a lease which has been renewed under this paragraph.Assignments
14. Without the prior consent of the Minister, the holder of an oil prospecting licence or an oil mining lease shall not assign his licence or lease, or any right, power or interest therein or thereunder.
15. The prescribed fee shall be paid on an application for an assignment under paragraph 14 of this Schedule and the Minister's consent for the assignment may be given on payment of such other fee or such premium, or both, and upon such terms, as he may decide: Provided that the Minister may wai ve payment of that other fee or that premium, or both, if he is satisfied that the assignment is to be made to a company in a group of which the assignor is a member, and is to be made for the purpose of re-organisation in order to achieve greater efficiency and to acquire resources for more effective petroleum operations.
16. The Minister shall not give his consent to an assignment unless he is satisfied that
(a)the proposed assignee is of good reputation, or is a member of a group of companies of good reputation, or is owned by a company or companies of good reputation(b)there is likely to be available to the proposed assignee (from his own resources or through other companies in the group of which he is a member, or otherwise) sufficient technical knowledge and experience and sufficient financial resources to enable him to effectually carry out a programme satisfactory to the Minister in respect of operations under the licence or lease which is to be assigned, and(c)the proposed assignee is in all other respects acceptable to the Federal Government.Farm-out
17.
(1)The holder of an oil mining lease may, with the consent of and on such terms and conditions as may be approved by the President, farm out any marginal field which lies within the leased area.(2)The President may cause the farm-out of a marginal field if the marginal field has been left unattended for a period of not less than ten years from the date of the first discovery of the marginal field.(3)The President shall not give his consent to a farm-out or cause the farm-out of a marginal field unless he is satisfied(a)that it is in the public interest so to do, and, in addition, in the case of a nonproducing marginal field, that the marginal field has been left unattended for an unreasonable time, not being less than ten years, and(b)that the parties to the farm-out are in all respects acceptable to the Federal Government.(4)For the purposes of this paragraph" farm-out" means an agreement between the holder of an oil mining lease and a third party which permits the third party to explore, prospect, win, work and carry away any petroleum encountered in a specified area during the validity of the lease * " marginal field" means such field as the President may, from time to time, identify as a marginal field. Terminations18.
(1)The holder of an oil prospecting licence or oil mining lease may, at any time, terminate his licence or lease by giving to the Minister not less than three months' notice in writing to that effect.(2)Where notice is given under this paragraph, no rent paid shall be refundable, and the termination shall otherwise be without prejudice to any obligation or liability imposed by or incurred under the licence or lease before the effective date of termination.19.
(l)Without prejudice to paragraph 12 of this Schedule, the holder of an oil prospecting licence or oil mining lease shall be entitled at any lime on giving three months' notice in writing to the Minister to surrender the licence or lease in respect of any particular part of the licensed or leased area.(2)Paragraphs 19 to 22 of this Schedule shall apply where a surrender is made under this paragraph.20. The shape and size of the area to be retained and of the area to be relinquished shall be approved by the Minister.
21. Subject to the provisions of all the relevant laws and on such terms and conditions as may be approved by the Minister, the licensee or lessee shall be entitled to such way-leaves for the laying, operation and maintenance of pipelines, telephones and the like through or across the surrendered area or areas as he may reasonably require
(a)for the carrying on of operations under the licence or lease, or(b)for inter communication and passage between retained areas (and, in the case of licences or leases in the continental shelf, between retained areas and onshore lands), and any such way-leaves shall form part or be included in the calculation of the amount of the retained areas.22. There shall be reserved to the Minister over the retained part such way-leaves, easements or other rights as in his opinion are necessary or desirable for the laying, operation and maintenance of pipelines, telephone lines and power-lines, and any way-leaves or other rights so reserved shall enure for the benefit of any person or body to whom the Minister may subsequently grant the same to the extent that he may so grant them.
23. No rent paid shall be refundable, but the surrender shall otherwise be without prejudice to any obligation or liability imposed by or incurred under the licence or lease before the effective date of surrender. Revocations
24.
(1)The Minister may revoke any oil prospecting licence or oil mining lease if the licensee or lessee becomes controlled directly or indirectly by a citizen of, or subject of, or a company incorporated in, any country which is(a)a country other than the licensee's or lessee's country of origin, and(b)a country the laws of which do not permit citizens of Nigeria or Nigerian companies to acquire, hold and operate petroleum concessions on conditions which in the opinion of the Minister are reasonably comparable with the conditions upon which such concessions are granted to subjects of that country.(2)In this paragraph " Nigerian company" means a company incorporated in Nigeria or a company controled directly or indirectly by citizens of Nigeria.25.
(1)The Minister may revoke any oil prospecting licence or oil mining lease if in his opinion the licensee or lessee(a)is not conducting operations(ii)in a vigorous and businesslike manner in accordance with the basic work programme approved for the licensee or lessee, and(iii)in accordance with good oil field practice, or(b)has failed to comply with any provision of this Act or any regulation or direction given thereunder or is not fulfilling his obligations under the special conditions of his licence or lease, or(c)fails to pay his due rent or royalties, whether or not they have been demanded by the Minister, within the period specified by or in pursuance 01" this Act or(d)has failed to furnish such reports on his operations as the Minister may lawful1y require.(2)Paragraphs 26 to 30 of this Schedule shall apply where there is revocation under this paragraph.26. The Minister shall inform the licensee or lessee of the grounds on which the revocation is contemplated and shall invite the licensee or lessee to make any explanation if he so desires.
27. If the Minister is satisfied with the explanation, he may invite the licensee or lessee to rectify the matter complained of within a specified period.
29. A notice sent to the last-known address of the licensee or lessee or his legal representative in Nigeria and published in the Federal Gazette shall, for all purposes, be sufficient notice to him of the revocation of the licence or lease.
30. The revocation shall be without prejudice to any liabilities which the licensee or lessee may have incurred, or to any claim against him which may have accrued to the Federal Government.Fees, rents and royalties
31. There shall be paid in respect of licences and leases to which this Schedule applies such
(a)the licensee or lessee makes no or no sufficient explanation, or(b)does not rectify the matter complained of within the specified period, the Minister may revoke the licence or lease and application fees as may be prescribed.32. There shall be paid in respect of licences and leases to which this Schedule applies such rents as may be prescribed.
33. Royalties shall be paid at the prescribed rates or, where rates are specified in special terms and conditions attached to the relevant licence or lease, at the rates so specified. General and supplementary
34. Licences and leases to which this Schedule applies shall be in the prescribed form or, where no form is prescribed, in such form as the Minister considers suitable.
35. If he considers it to be in the public interest, the Minister may impose on a licence or lease to which this Schedule applies special terms and conditions not inconsistent with this Act including (without prejudice to the generality of the foregoing) terms and conditions as to
(a)participation by the Federal Government in the venture to which the licence or lease relates, on terms to be negotiated between the Minister and the applicant for the licence or lease, and(b)special provisions applying to any natural gas discovered, which provisions shall include(i)the right of the Federal Government to take natural gas produced with crude oil by the licensee or lessee free of cost at the f1are or at an agreed cost and without payment of royalty(ii)the obligation of the licensee or lessee to obtain the approval of the Federal Government as to the price at which natural gas produced by the licensee or lessee (and not taken by the Federal Government) is sold, and(iii)a requirement for the payment by the licensee or lessee of royalty on natural gas produced and sold.36. The holder of an oil prospecting licence or oil mining lease shall
(a)have a general right to enter and remain on the licensed or leased lands and do such things as are authorised by the licence or lease, and(b)shall comply with any enactment relating to town or country planning or regulating the construction, alteration, repair or demolition of buildings, or providing for similar matters, which affects him in carrying out the operations authorised by the licence or lease.37. The holder of an oil exploration licence, oil prospecting licence or oil mining lease shall, in addition to any liability for compensation to which he may be subject under any other provision of this Act, be liable to pay fair and adequate compensation for the disturbance of surface or other rights to any person who owns or is in lawful occupation of the licensed or leased lands.
38. The holder of an oil mining lease shall ensure that
(a)within ten years from the grant of his lease(i)the number of citizens of Nigeria employed by him in connection with the lease in managerial, professional and supervisory grades (or any corresponding grades designated by him in a manner approved by the Minister) shall reach at least 75% of the total number of persons employed by him in those grades, and(ii)the number of citizens of Nigeria in anyone such grade shall be not less than 60% of the total, and(b)all skilled, semi-skilled and unskilled workers are citizens of Nigeria.39. The holder of any licence or lease to which this Schedule applies shall at all times indemnify and keep harmless the Federal Government, the Minister and every officer in the civil service of the Federation or the States (and their agents) against all actions, costs, charges, claims and demands howsoever which may be made or brought by any third party in relation to any matter or thing done or purported to be done in pursuance of this Act.
40. If any fee, rent or royalty due under this Act is unpaid for a period of one month after the date when it becomes due (whether legally demanded or not), the Minister may, in addition to any other remedies which may be available
(a)enter into and upon any land, property or premises possessed or occupied by the licensee or lessee in connection with the licence or lease, and(b)seize and distrain and sell as landlords may do for rents in arrear, any petroleum, petroleum products, engines, machinery, tools, implements or other effects belonging to the licensee or lessee which may be found in or upon the land, property or premises, and(c)out of moneys arising from the sale of the distress, retain and payoff the arrears of the said fee, rent or royalty and also the costs and expenses incident to the distress and sale, rendering the surplus (if any) to the licensee or lessee.41.
(1)Failure on the part of the holder of a licence or lease to which this Schedule applies to fulfil any of the terms or conditions of the licence or lease shall not (except as may be otherwise provided for in or in relation to the licence or lease) give the Minister any claim against the licensee or lessee, or be deemed a breach of the licence or lease, if the failure arises from causes beyond the control of the licensee or lessee.(2)If from any such cause the fulfilment by any such licensee or lessee of any term or condition of his licence or lease or of any provision of this Act is delayed, the period of delay shall be added to the period fixed for the fulfilment of the term or condition.42. If any question or dispute arises in connection with any licence or lease to which this Schedule applies between the Minister and the licensee or lessee (including a question or dispute as to the payment of any fee, rent or royalty), the question or dispute shall be settled by arbitration unless it relates to a matter expressly excluded from arbitration or expressed to be at the discretion of the Minister.
SECOND SCHEDULE
(Section 7(2)) - Rights of pre-emption
1. The Minister shall have the right to require the holder of any licence or lease granted under this Act (the holder in question being referred to in this Schedule as "the licensee or lessee")
(a)to provide for the Federal Government, to the extent of any refinery capacity he may have in Nigeria, petroleum products complying with specifications given by the Minister(b)to deliver to any person holding a licence to operate a refinery, such quantity and quality of crude oil as may be specified by the Minister to the extent that the licensee or lessee has crude oil of that quantity and quality.2. The licensee or lessee shall use his best endeavours to increase so far as possible with his existing facilities the supply of petroleum or petroleum products, or both, for the Federal Government to the extent required by the Minister.
3. The licensee or lessee shall, with all reasonable expedition and so as to avoid demurrage on the vessels conveying the same, use his best endeavours to deliver all petroleum or petroleum products purchased by the Minister under his said right of pre-ernption in such quantities, and at such places of shipment or storage in Nigeria, as may be determined by the Minister.
4. If a vessel employed to carry petroleum or petroleum products pursuant to paragraph 3 of this Schedule is detained on demurrage at the port of loading, the licensee or lessee shall pay the amount due for demurrage according to the terms of the charter-party or the rates of loading previously agreed by the licensee or lessee, unless the delay is due to causes beyond the control of the licensee or lessee.
5. Any dispute which may arise as to whether a delay is due to causes beyond the control of the licensee or lessee shall be settled by agreement between the Minister and the licensee or' lessee or, in default of agreement, by arbitration.
6. The price to be paid for petroleum or petroleum products taken by the Minister in exercise of his said right of pre-ernption shall be
(a)the reasonable value at the port of delivery, less discounts to be agreed by both parties, or(b)if no such agreement has been entered into prior to the exercise of the right of pre-emption, a fair price at the port of delivery to be settled by agreement between the Minister and the licensee or lessee or, in default of agreement, by arbitration.7. To assist in arriving at a fair price for the purposes of paragraph 6 (b) of this Schedule, the licensee or lessee shall, if the Minister so requires
(a)furnish for his confidential information particulars of the quantities, descriptions and prices of petroleum or petroleum products sold to other customers and of charters or contracts entered into for their carriage, and(b)exhibit original or authenticated copies of the relevant contracts or charterparties.8. The Minister may take control of any works, plants or premises of the licensee or lessee, and if he does so, the licensee or lessee and his servants or agents shall conform to and obey all directions issued by the Minister or on his behalf.
9. Reasonable compensation shall be paid to the licensee or lessee for any loss or damage caused to him by reason of the exercise by the Minister of the powers conferred by paragraph 8 of this Schedule.
10. Any compensation payable under paragraph 9 of this Schedule shall be settled by agreement between the Minister and the licensee or lessee or, in default of agreement, by arbitration.
THIRD SCHEDULE
(Section 14(1).) - Repeals
Chapter or numberCap.120Short title or citation of 1958 Laws of Mineral Oils Act NigeriaExtent of repeal The whole ActCap.121Short title or citation of 1958 Laws of Mineral Oils Act NigeriaExtent of repeal The words "and mineral oils", in section 3, together with the words "mineral oils" in the marginal note.Cap.150 Short Title or citation of 1958 Laws of Nigeria Petroleum ActExtent of repeal The whole ActCap.151Short Title or citation of 1958 Laws of Nigeria Petroleum ActExtent of repeal The whole ActShort title or citation Petroleum Control Act 1967Extent of repeal Section 7FOURTH SCHEDULE
(Section 14(3).) - Transitional and savings provisions
Minerals Act
1. Any licence or lease granted under an enactment repealed by this Act shall continue in force notwithstanding the repeal, but shall be subject to this Act and to any regulations made thereunder except as regards the duration of the licence or lease, the rent and royalties payable in respect thereof and any term or condition as to which the Minister certifies that the justice of the case requires that the term or condition in question shall continue to be effective notwithstanding this Act.
Petroleum Fuel Control Act
2. Where a refinery constructed with the approval of the Federal Government, or of any of its predecessors, was in operation immediately before the commencement of this Act
(a)it shall be the duty of the persons in control of the refinery to apply in writing within sixty days of the commencement of this Act (or within such further period as the Minister may allow) to the Minister for a licence under section 3 of this Act(b)on receipt of the application the Minister shall grant the licence subject to the payment of such fees (including application fees), such rent and such conditions as he thinks fit, if any, and(c)section 12 (2) of this Act shall not have effect in relation to the refinery during the said sixty days or any such further period or, if the application is duly made, until the application is finally disposed of.3.
(1)Any existing operator may, within sixty days of the commencement of this Act or within such further period as the Minister may allow, apply in writing to the Minister for a licence under section 4 (1) of this Act or under any regulations coming into force simultaneously with this Act, and section 16 (2) of this Act, in so far as it relates to the existing operator and to the Iicence(a)shall not have effect during the said sixty days or any such further period, or(b)if such a licence is applied for under this paragraph, have effect in relation to the applicant until his application has been finally disposed of.(2)In this paragraph "existing operator", in relation to a licence, means any person who immediately before the commencement of this Act was carrying on with the knowledge and approval of the Federal Government the activity regulated by the licence.4.
(1)The Mineral Oils (Safety) Regulations 1963 and, to the extent that they were made under section 3 (1) of the Petroleum Act, the Petroleum Regulations 1967, shall be deemed to have been made under section 9 of this Act and may be added to, amended, varied or revoked accordingly.(2)The power conferred by sub-paragraph (1) of this paragraph shall be deemed to include power to make any modifications necessary to bring the said regulations into conformity with the powers conferred by the said section 9.5. A person shall not be convicted of an offence for doing any act authorised by a licence or lease as saved by paragraph 1 of this Schedule.
6. Within the twelve months immediately following the commencement of this Act, the Minister may by order in the Federal Gazette make such further transitional or saving provisions (not inconsistent with this Schedule) as he may think necessary or desirable.