Nigerian Oil and Gas Industry Laws

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English
516 Pages
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Description

Though predominantly on oil and gas law, this is nonetheless a veritable Reference Book on the oil and gas industry in Nigeria. It places before anyone interested in the oil and gas industry basic and critical oil and gas issues not in common circulation in existing texts on the subject. The book is arranged in such a chronological order, like reference books and dictionaries tend to be,that a lay person in going through it would now know how oil is explored and found,how oil fields may be onshore and offshore, how oil blocs are bidded for, how oil is drilled, including associated gas deposits, among others. The transportation of oil and gas, storage of oil and gas, refining of oil and processing of gas, marketing of oil and gas,the impact of oil and gas exploration, production and revenues on the Nigerian environment, politics and economy and a myriad of other issues are comprehensively covered. The book should prove most useful to the lawyer, petroleum geologist, petroleum engineer, policy makers, investors, local and international development agencies and bodies, lecturers and students specialising in wide ranging subjects as economics, development studies, engineering, management, public administration, insurance, marketing, accounting and finance.

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Published 29 September 2017
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EAN13 9789785545357
Language English
Document size 7 MB

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Nigerian Oil and Gas Industry
Laws, Institutions and Policies







































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ii



Nigerian Oil and Gas Industry
Laws, Policies, and Institutions








By

Professor Adamu Kyuka Usman




















iii





                  
 
ISBN: 978-987-547-755-1         

       
                   
                          
                         
                    
                       
                     
         


          
                            
                                             
                                         
                                      
                 

                                       
          
                                                
                                       
                                                
  














iv



Dedication


To the Conscionable Lawyer


































v





Acknowledgements


I cannot possibly acknowledge in person everyone that contributed to giving life
to this book largely because I cannot remember the names of some of the people
that so contributed. Most of the book was written when I was on Sabbatical Leave
at National Petroleum Investment Management Services (NAPIMS) Lagos from
2013 to 2014. In the course of writing the book, I approached many NAPIMS staff
from petroleum geologists to petroleum engineers and lawyers for explanation of
various oil and gas issues I did not understand. In the Nigerian National
Petroleum Corporation (NNPC) bus that I used to board when going to work and
when coming from work, I accessed knowledge from these people. At work in
their various offices, I accessed knowledge from these people. Almost everyone I
approached for explanation of one issue or the other, I found was not only
willing, but excited to explain the issue to me. I also found that the staff were so
knowledgeable in oil and gas matters that the problem often was not their being
able to explain what I was seeking explanation of, but my ability to keep pace with
their often fast-paced explanations. Most of them were so deep in their knowledge
of oil and gas issues that they were to me like the oil wells they drilled – invaluable
reservoirs of black gold. When I returned from my Sabbatical Leave and a
colleague at the Faculty of Law Ahmadu Bello University, Zaria asked me if I was
able to have granted to me an oil well when I was at NAPIMS, I said yes. He was
surprised, and I thought, envious. But I quickly relieved him by telling him the oil
well I was granted was not the type he supposed: It was the oil well of knowledge
of oil and gas issues. I deeply appreciate all the kind staff of NAPIMS that so
willingly and competently explained to me operational and regulatory oil and gas
issues I knew little about. In particular, I thank Alex Tarka then Deputy Manager
Joint Ventures for the various lecture series I had in his office on petroleum
geology and field operations.
I also thank Steve Bawa for getting me the Sabbatical Appointment with
NNPC. I thank the authorities of Ahmadu Bello University for granting me
Sabbatical Leave to take up the Appointment. Finally, I thank my wife Maria and
my three Children, Justice, Sunfair and Fairprincess for giving me the peace of
mind to write the book.

vi





Preface

This book of Thirty-one chapters is divided into five parts namely: Part A, B, C, D
and E. Part A deals with policy, regulatory and operational institutions in the
Nigerian oil and gas industry. The policy institutions are the Nigerian President
and the Minister of Petroleum Resources. The regulatory institutions are the
National Council of Ministers, the NNPC Board, the Petroleum Inspectorate and
the Department of Petroleum Resources (DPR). The operational institutions
include the Nigeria National Petroleum Corporation (NNPC) with all its
directorates, subsidiaries and Corporate Service Units, International Oil
Corporations operating in Nigeria, and indigenous Nigerian oil companies.
Part B dwells on upstream oil and gas issues, law and policy. Issues of
petroleum geology and engineering, seismic data acquisition, oil and gas
exploration and prospecting, drilling and production of oil, the law and policy on
these issues are all dealt with in this part.
Part C is on prototype oil and gas prospecting and production agreements
such as Concessions, Joint Venture Agreements, Production Sharing Contracts
and Service Contracts. It also dwells on prototype oil and gas agreements for hire
of services or lease of equipment.
Part D deals with downstream oil and gas issues, law and policy, petroleum
refining and gas processing, transportation, marketing and distribution of refined
petroleum and processed gas and their by-products. The law and policy on these
issues are dealt with here.
Part E considers the impact of the oil and gas industry on Nigeria’s economic
and industrial development, on politics, the environment and host communities.
The law and policy on some of these issues are considered along with the issues.
Nigerian oil and gas law is essentially statutory and contractual. The five
parts this book is divided into bare this fact out.
If an issue does not fall within the core thrust of this text, but it is an issue
that advances knowledge of the oil and gas industry, it is placed under the glossary
column at the back of the book.
It is hoped the book will make a modest contribution to other books already
in existence on the subject. It is also hoped it would be found useful to the oil and
gas industry and those interested in the industry.
vii





Abbreviations and Acronyms

ARP Approved Retail Price
AU African Union
BFP Basic Fuel Price
CBA Collective Bargaining Agreement
CBN Central Bank of Nigeria
CCMA Commission for Conciliation, Mediation and Arbitration
CFC Chlorofluorocarbons
CSR Corporate Social Responsibility
DPR Department of Petroleum Resources
ECOWAS Economic Community of West African States
EOMP Expected Open Market Price
GDP Gross Domestic Product
IAP Industrial Arbitration Panel
ICT Information and Communications Technology
ILO International Labour Organisation
IMF International Monetary Fund
IPMAN Independent Petroleum Marketers Association of Nigeria
LDCs Less Developed Countries
LPG Liquefied Petroleum Gas
MDA Ministries, Departments and Agencies
MDGs Millennium Development Goals
MNCs Multinational corporations
MOU Memorandum of Understanding
NAFDAC National Agency for Food and Drugs Administration and
NAOC National Oil Corporation
NAPIMS National Petroleum Investment Management Services
NBS Nigeria Bureau of Statistics
NBTE National Board for Technical Education
NCCA National Commission for Conciliation and Arbitration
NCCE National Commission for Colleges of Education
NDDC Niger Delta Development Commission
NECA Nigerian Employers’ Consultative Association
NEEDS National Economic Empowerment and Development Strategy
NGOs Non-governmental organizations
NIC National Industrial Court
viii NLAC National Labour Advisory Council
NLC Nigeria Labour Congress
NNOC Nigerian National Oil Corporation
NNPC Nigerian National Petroleum Corporation
NOCs National Oil Companies
NPF Nigeria Police Force
NSITF Nigeria Social Insurance Trust Fund
NSIWC National Salaries, Incomes and Wages Commission
NUC National Universities Commission
NUPENG Nigeria Union of Petroleum and Natural Gas Workers
OMCs Oil marketing companies
OMPADEC Oil Mineral Producing Areas Development Commission
OPEC Organisation of Petroleum Exporting Countries
PENGASSAN Petroleum and Natural Gas Senior Staff Association of Nigeria
PHCN Power Holding Company of Nigeria
PIB Petroleum Industry Bill
PMS Premium Motor Spirit
PPMC Pipelines and Product Marketing Company
PPPRA Petroleum Products Pricing Regulatory Agency
PRSP Poverty Reduction Strategy Paper
PSF Petroleum Support Fund
RMAFC Revenue Mobilisation Allocation and Fiscal Commission
SAP Structural Adjustment Programme
SMEs Small and Medium-scale Enterprises
sms Short Message Service
SON Standard Organisation of Nigeria
SPDC Shell Petroleum Development Company
SPL Subsidy Per Litre
TDA Trade Disputes Act
TNCs Transnational Corporations
TUA Trade Unions Act
UNDP United Nations Development Programme
UNIDO United Nations Industrial Development Organisation
UNO United Nations Organisation
UPPF Unified Petroleum Price Fund
WHO World Health Organisation
WTO World Trade Organization





ix


Contents and Entries

Dedication
Acknowledgements
Preface
Abbreviations and Acronyms
Introduction
PART A: Oil and Gas Policy, Regulatory and
Operational Institutions
Policy and Regulatory Institutions; 1
-The President; 1
-The Minister; 1
-The National Council of Ministers
-NNPC Board; 4
-Petroleum Inspectorate; 6
-Department of Petroleum Resources (DPR); 6
Operational Institutions
-Nigerian National Petroleum Corporation; 11
-Reasons for the Establishment of National Oil Companies; 11
-NNPC Structure; 12
-NNPC Directorates; 13
-Exploration and Production; 13
-Refining and Petrochemicals; 13
-Commercial and Investment; 13
-Finance and Account; 14
-Gas and Power; 14
-NNPC Subsidiaries; 14
-Nigerian Petroleum Development Company (NPDC); 14
-National Engineering and Technical Company (NETCO); 15
-Pipelines and Products Marketing Company (PPMC); 16
-Integrated Data Services Ltd (IDSL); 17
-Warri Refining and Petrochemical Company (WRPC); 18
-Kaduna Refining and Petrochemical Company (KRPC); 19
-Port Harcourt Refining Company Ltd (PHRC); 19
-Nigeria-Gazprom Ltd; 20
-Nikorma Transport Ltd; 20
x -Midas Marine Ltd; 20
-Hydrocarbon Services Company Ltd; 20
-NNPC Pension Fund Ltd; 20
-NNPC Properties Ltd; 21
-NNPC Retail Ltd; 21
-Duke Oil Services Ltd; 21
-Calson Bermuda Ltd; 22
-Nigerian Gas Company; 22
-NNPC Quasi-subsidiary Gas Companies; 23
-Olokola Liquefied Natural Gas; 23
-Escravos Gas-To-Liquid Project; 24
-Oso NGL Plant; 25
-Brass Liquefied Natural Gas Ltd; 25
-Eleme Petrochemical Company Ltd; 26
-NNPC Corporate Service Units; 27
-National Petroleum Investment Management Service; 27
-National Petroleum Assets Management Corporation; 29
-Crude Oil Marketing Division; 30
-Requirements for buying and selling Nigerian crude oil under Term
Contracts; 30
-Crude Oil for refined products swaps; 36
-Research and Development Corporate Service Unit; 36
-Engineering and Technology Division; 37
-Information Technology Corporate Service Unit; 37
-National Frontiers Exploration Services; 37
-Liquefied Natural Gas; 38
-Group Public Affairs; 38
-Group Human Resources; 38
-Special Projects; 38
-Greenfield Refineries; 38
-Renewable Energy; 39
-Nigerian Content; 40
-Nigerian Oil and Gas Industry Content Development Act 2010; 42
-Stringent conditions for allottees of marginal fields; 44
-Upstream Business Development; 46
-Downstream Business Development; 46
-Medical Services; 46
-Corporate Planning and Development; 46
-Gas Master Plan; 47
-Power; 47
-Finance; 47
-Accounts; 47
-Audit; 47
-Regulatory and Policy Compliance Corporate Service Unit; 47
-Strategic Business Unit (SBU); 48
xi -corporate service unit; 49
-Institutional Structures under the Petroleum Industry Bill
2012
-NNPC and the need for reform; 51
International and indigenous oil corporations; 53
-Shell Petroleum Development Company; 53
-Mobil Producing Nigeria; 54
-Chevron Nigeria Limited; 55
-Total Exploration and Production Nigeria Ltd; 55
-Nigerian Agip Oil Company Limited; 56
-Texaco; 57
-Dubri Oil; 57
-Famfa Oil Nigeria Ltd; 57
-South Atlantic Petroleum; 57
-Consolidated Oil Nigeria Producing Limited ; 57
International Oil and Gas Corporations; 59
-Organization of Petroleum Exporting Countries; 59
-structure and organization; 61
-Contributions and Achievements; 61
-Present and Future OPEC - Challenges and Prospects; 66
-World Petroleum Council; 68
-Gas Exporting Countries Forum; 69
-The World Energy Councils; 70
-Shadowy Oil Cartels; 70
-Old Seven Sisters; 70
-New Seven Sisters; 71

PART B: Upstream Oil and Gas Issues, Law and Policy
Discovery, Uses and Importance of Oil and Gas in Nigeria; 73
-Uses of Oil; 77
-Importance of Oil; 79
-Discovery of Gas; 80
-Uses of Gas; 80
-Importance of gas; 81
-Major Events in the history of the Nigerian Oil and Gas
Industry; 81
Surveys for Oil and Gas and Mapping of Oil and Gas Blocs; 85
-Types of Oil and Gas Survey; 85
-Reconnaissance survey; 85
-Seismic survey; 85
-Seismic Survey, Seismic Data Acquisition, Processing and Interpretation; 85
-Mapping of Oil Blocs; 87
Petroleum Geology, Petroleum Engineering, Naming and
Designation of Oil Fields, Wells and Discovery Reports; 89
xii -Petroleum geology; 89
-Source; 90
-Reservoir; 90
-Seal; 90
-Trap; 90
-Maturation; 90
-Migration; 90
-Timing; 90
-Petroleum engineering; 90
-Oil Drilling; 91
-Types of Oil Wells; 91
-Getting oil out of the Well; 91
-Types of Drilling for Oil; 93
-Vertical Drilling; 93
-Horizontal Drilling; 94
-Directional Drilling; 94
-Multilateral Drilling; 94
-Extended Reach Drilling; 94
-Complex Path Drilling; 94
-Naming and Designation of Oil wells and Fields; 95
-Discovery Reports; 96
Oil Exploration, Oil Prospecting and Oil Mining; 97
-Definition of Oil Exploration and Oil Prospecting; 97
- Grant of Oil Exploration, Oil Prospecting Licence and Oil Mining Lease by
the Minister of Petroleum; 99
-Oil prospecting licences; 100
-Oil mining leases; 100
- Character of an Oil Exploration, Oil Prospecting License and Oil Mining
Lease; 101
- Registration of Oil Prospecting License and Oil Mining Lease; 103
-Stamping of Oil Mining Leases; 104
-Duration of Oil Exploration and Oil Prospecting Licence; 104
- Petroleum Exploration Work Programme; 105
- Discovery of Oil and Gas; 107
- Unitization of Oil Blocs; 109
- Right to a Mining Lease; 111
-Life Span of a Lease; 112
-Renewal of Lease; 114
-Relinquishment; 114
-Surrender of Licence or Lease; 117
-Right of way; 117
-Licence and Lease Award Process; 118
-Assignment and Renewal of Oil Prospecting Licences and Oil Mining
Leases; 121
-Assignments, Mergers and Acquisitions; 123
xiii - Grounds for Revocation of Licence or Lease; 124
- Discretion of the Minister of Petroleum to grant a Prospecting Licence
and Oil Mining Lease; 126
- Examination and Export of Samples, Specimens of Rock and Petroleum; 127
-Rights and Powers of an Oil Exploration Licensee; 128
-Duties of an Oil Exploration Licensee; 128
- Rights and Powers of an Oil Prospecting Licensee and Oil Mining Lessee; 133
- Duties of an Oil Prospecting Licensee and Oil Mining Lessee; 133
-Environmental Quality Management; 138
-Domestic Gas Supply Obligation; 138
-Transparency; 139
Drilling and Production of Oil; 141
- Stage for Oil Drilling and Production; 141
- Drilling for Oil and Production of Oil; 141
- Operation of Drilling Rigs; 143
- Maintenance of Apparatus and Conduct of Operations; 144
- Boundary marks; 144
- Field Development Programme; 145
- Progress Reports; 146
- Production of Crude Oil and Natural Gas; 146
- Confinement of Petroleum; 147
- Drainage of waste oil; 149
- Compliance with safety regulations and instructions; 150
- Termination; 150
- Records of Boreholes and Wells; 151
- Records of Subsurface Plans, Maps, Charts and Sections; 152
- Measurement and Weighing of Crude Oil and Natural Gas; 154
- Accounts and Particulars; 155
- Oil Wells Abandonment; 155
Gas Gathering and Processing Distinguished from Petroleum
Mining and Production; 157
-Gathering and Processing of Gas by Floating Liquefied Natural Gas Technique;
157
Storage of Oil and Gas; 159
-Storage of Oil; 159
-Storage of Gas; 159
-Depleted Gas Reservoir; 160
-Aquifer Reservoir; 161
-Salt formation; 162
-LNG Storage facilities; 162
-Pipeline Storage; 162
-Gas Holder Storage; 163
-Future of Gas Storage Technology; 163

xiv Transportation of Crude Oil and Gas; 165
-Transportation of Crude Oil; 165
-Oil Pipelines Survey Permit; 165
-Restrictions on the Survey Permit; 169
-Oil Pipeline Licence; 169
-Notice of Application for Pipeline Licence; 170
-Objections to Application for Pipeline Licence and Hearing of Objections;
171
-Rights, Powers and Liabilities of an Oil Pipeline Licensee; 172
-Duration and Contents of an Oil Pipeline Licence; 175
-Application to use Oil Pipeline by a Non-Owner; 176
-Compensation; 177
-Hindering or Obstructing Entering or Taking Possession of Land Pursuant to
an Oil Pipeline Licence; 179
-Breach of Oil Pipeline Licence; 180
-Pipelines Design; 181
-Pipelines construction; 182
-Inspection and Testing of Pipelines; 184
-Pipelines Operation and Maintenance Guidelines; 186
-Transportation of Gas; 186
-Gas Transmission and Distribution Guidelines; 187
-The contractual character of Permits, Licences and Leases; 188
Risks and Expenses of Oil and Gas Operations and the
Guarantees Needed For Oil and Gas Operations; 189
-Risk of Oil and Gas Operations; 189
-Expenses of Oil and Gas Operations; 189
-Insurance; 190
-Principle of Uberrimae fidei; 191
-Principle of Insurable Interest; 191
-Principle of Indemnity; 191
-Principle of Contribution; 192
-Principle of Subrogation; 192
-Principle of Loss Minimization; 192
-Principle of Causa Proxima (Nearest Cause); 192
-Arbitration; 193
-The Chartered Institute of Arbitration clause; 193
-London Court of International Arbitration clause; 194
-International Court of Arbitration Clause; 194
-Doctrine of Kompetenz-Kompetenz; 195
-Principle of Separability; 196
-Force Majeure; 196
Ownership of Oil and Gas; 199
-Theories of Oil and Gas Ownership; 199
-Ownership of Oil and Gas by the Nigerian State under Nigerian Law; 200
xv -Ownership of Oil and Gas by the Nigerian State under International Law;
200
-Ownership of Oil and Gas in other Jurisdictions; 201

PART C: Prototype Oil and Gas Contracts
The Concession; 205
-The Concession; 205
-Definition and Legal Basis of Concession; 205
-Types of Concessions; 205
-Samples of Oil Prospecting Licences and Oil Mining Leases; 207
-State of Michigan Oil Prospecting Licences and Oil Mining leases
Sample; 207
-Definitions; 207
-Term of Lease; 209
-Economic Terms; 211
-C1. Rentals; 211
-Terms for Shut-in Wells and Wells Suspended from Operation;
213
-Default of Lease; 214
-Assignments and Contracts; 215
-Surface Damage Payments; 216
-Records and Logs; 217
-Environmental Terms; 218
-Lessor’s Rights; 219
-Lessee’s Rights; 221
-Reclassification of Land under Lease; 221
Joint Venture and Joint Operating Agreements; 223
-Joint Venture Agreement; 223
-Joint Operating Agreement; 223
-Appointment of Operator; 223
-Operator’s Right, Powers and Responsibilities; 224
-Cessation of Operatorship; 226
-Resignation of Operator; 227
-Appointment of Successor Operator; 228
-Change of Operatorship, Transfer of Property on Change of Operator; 228
-Audit of Accounts on Change of Operator; 228
-Disposal of Joint Property by Operator; 229
-Use of a Party’s Equipment by Operator; 229
-Operator’s Business and Activities Outside the Joint Operations; 229
-Operating Committee, Its Establishment, Powers and Duties; 229
-Members and Function of the Operating Committee; 230
-Meetings; 230
-Quorum; 231
-Procedure; 231
xvi -Decision without a Meeting; 231
-Sub-Committees; 232
-Time Table for work Programmes and Budgets; 232
-Rights of the Parties; 232
-Access; 232
-Technology, Data, Patents and Patent Rights; 233
-Funding of Joint Operations; 233
-Sharing of Funding; 233
-Cash Calls; 234
-Payments for Joint Operating Expenditures; 235
-Cash Call Crude; 235
-Failure of a Party to Pay or to Provide for Payment of a Cash Call; 236
-Financial Reports and Returns; 237
-Internal Audits; 238
-Audits of Joint Account; 238
-Payments to Government; 238
-Rates, Taxes and Charges; 238
-Sole Risk Operations; 238
-Conditions for Sole Risk Operations; 239
-Sole Risk Notice; 239
-Sole Risk Operation as Joint Operations; 239
-Sole Risk Operation; 340
-Operator of Sole Risk Operation; 340
-Commencement of Sole Risk Operation; 340
-Information Concerning Sole Risk Operation; 340
-Election to participate in Further Work; 340
. Use of Joint Property and Personnel of Operator for Sole Risk Operation; 241
-Indemnification of the Non-Participating Party; 241
. Title to the Sole Risk Operation, Production and Facilities; 241
. Reports and Dealing with the Government; 241
-Representation of Parties before Government; 241
-Reports and Applications; 241
-Copies of Reports; 241
-Assistance of Non-Operator; 241
-Training and Assignment of NNPC Staff; 241
-Handling of Information Obtained from Operations; 241
-Confidentiality; 243
-Non-Disclosure; 243
-Disposal of Crude Oil; 243
-Rights of Parties; 243
-Passing of Title; 243
-Assignment and Transfer; 243
-rights to Assign or Transfer; 243
-Assignment of Operatorship to Operator’s Affiliate; 244
-Parties’ Preferential Right and Option; 244
xvii -Effective Date of Transfer; 245
-Retention of Liability by Transferring Party; 245
-Pre-Assignment Obligations; 245
-Obtaining of Government Consents; 245
-Costs and Expenses; 246
-Encumbrances; 246
-Relation of the Parties; 246
-Litigation; 246
-Contract Tender Procedure; 246
-General Conditions of Contracts; 247
-Payment Terms; 247
-Language of Contract; 248
-Laws, Regulations and Permits; 248
-Termination; 248
-Local Subsidiary; 248
-Materials & Equipment Procurement Procedure; 248
-Project Monitoring; 249
-Uniform Nomination, Ship Scheduling and Lifting Procedure; 249
-Definition of Terms; 249
-Notice of Availability; 250
-Operator’s Reports; 250
-Notification of Lifting Schedules; 251
-Tanker Substitution; 251
-Overlapping Date Ranges; 251
-Confirmation of Lifting Schedules; 251
-Operational Delays; 251
-Estimated Delayed Arrival of a Tanker; 251
-Tanker Standards; 252
-Production Decreases/Increases Subsequent To Nomination; 252
-Delivery Terms and Conditions; 252
-Tanker Notification; 253
-Notice of Readiness; 253
-Early Tanker Arrival; 253
-Late Tanker Arrival; 253
-Laytime; 253
-Demurrage; 253
-Change of Berth; 254
-Tanker Departure; 254
-Loading Hoses; 254
-Partial Cargo; 254
-Crude Oil Quality and Measurement; 254
-Certification; 254
-Acceptance of Certificate; 255
-Rejection Certificate; 255
-Quantity Determination; 255
xviii -Quality Determination; 255
-Samples; 255
-Non-Waiver of Enforcement of Agreement; 255
-Change of Regulations; 256
-Arbitration Procedure; 256
-Arbitration Legislation; 256
-Venue; 256
-Governing Law; 256
-The Cash Call Debacle; 256
-Participating Agreements; 257
Production Sharing Contracts; 261
-Fundamental Provision in a Production Sharing Contracts; 261
- National interest provision; 261
-Relinquishment clause; 261
-Term contract; 261
-Rights and obligations of the parties; 262
-Bonuses; 263
-Recovery of Operating Cost and Crude Oil Allocation; 263
-Carry Provision; 263
-Confidentiality and Public Announcements; 264
-Force Majeure; 264
-Royalty and Taxes; 264
-Non-Capital Costs; 265
-Operating Cost; 265
-Minimum work/expenditure provision; 265
-Capital Costs; 268
-Computation of Royalty, Concession Rentals and PPT; 269
-Lifting Allocation; 270
-Adjustments of Lifting Allocations; 270
-Definition of Terms; 271
-Production/Notice of Availability; 271
-The Contractor’s Reports; 272
-Project Implementation Procedure; 273
-Scheduling Notification; 274
-Production Decreases/Increases Subsequent to Nomination; 275
-Delivery Terms and Conditions; 276
-Crude Oil Quantity and Measurement; 278
-Subcontracting; 279
-Contract Tender Procedure; 280
-General Conditions for Subcontracting; 281
-Materials and Equipment Procurement; 282
-Project Monitoring; 283
-Laws and Regulations; 284
-Summary; 284

xix Service Contract; 285
-Duties and Obligations of the Contractor; 285
-Rights and Obligations of NNPC; 287
-Exploration Programme and Budget; 288
-Management Committee; 288
-Composition of Management Committee; 288
-Appraisal Programme and Budget; 289
-Production Operations; 290
-Payment to the Contractor; 291
-Title of NNPC to Petroleum and other Moveables; 291
-Utilization of Natural Gas; 292
-Employment and Training of Nigerians; 292
-Sub-Contractors; 293
-Contractor’s Accounting; 293
-Taxes, Royalties, Dues; 294
-Insurance; 294
-Confidentiality; 294
-Force Majeure; 295
-Laws and Regulations; 295
-Termination; 296
FPSO (Floating Production Storage and Offloading) Charter
Contract; 299
----Subcontract Foundations of FPSO Charter Contracts; 299
-Threshold Representations and Assurances by the Contractor; 299
-Delivery; 300
-Contractor’s Responsibilities; 301
-Contractor’s Personnel; 301
-Company’s Obligations; 302
-Term of Charter; 303
-Relationship of the Parties; 303
-Representations and Warranties of the Contractor and the Company; 304
-Guarantees; 305
-Reimbursable Expenses; 305
-Liens; 305
-Health, Safety and Environmental Obligations; 306
-Taxes; 307
-Conflicts of Interest; 309
-Party Representatives; 309
-Termination; 310
-Maintenance, Reduced Performance and Shut Down; 311
-Options to Lay-up and to Relocate FPSO; 311
-Requisition; 312
-Actual or Constructive Total Loss; 312
-Variations; 312
-Assignment; 313
xx -Redelivery of FPSO; 314
-Pollution Control; 314
-Force Majeure; 314
-Insurance; 315
-Arbitration; 315
-Demobilization; 316
Crude Oil Term Sale Contract; 317
-General terms and conditions for the sale of crude oil and oil products; 317
-Title and risk; 317
-Quality and quantity; 318
-Inspection; 318
-Purchase Price, Surety, Advance and Payment; 319
-Purchase Price; 319
-Surety; 319
-Advance; 319
-Payment; 320
-Transportation, Demurrage and Overtime, Nominations and Insurance; 321
-Transportation; 321
-Demurrage and overtime – nominations; 321
-Insurance; 321
-Documents; 322
-Taxes, levy and dues; 322
-Disputes; 322
-Liability; 322
-Liability of the Seller; 322
-Liability of the Buyer; 323
-Liability of the Buyer and the Seller; 323
-Health, safety and environment; 323
-Trade, control and boycott; 324
-Anti-corruption; 325
-Force Majeure; 325
-Termination; 326
-Assignment; 327
-Severability; 327
-Applicable law and jurisdiction; 328
Fiscal Incentives and Returns on Oil and Gas; 329
-Rational Foundations for Fiscal Incentives for Oil and Gas Companies and
Returns on Oil and Gas; 329
-Instruments of fiscal incentives to oil and gas companies; 329
-Statutes; 329
-Side Letter; 332
-Memorandum of Understanding; 332
-Investment Tax Credits; 333
-Investment Allowance; 334
-Capital Allowance; 334
xxi -Depreciation Allowance; 334
-Returns on Oil and Gas; 335
-Returns on Participating Interests; 335
-Returns on Ownership Rights; 335
-Rents; 335
-Royalties; 336
-Petroleum Profits Tax; 338
Stability of Oil and Gas Investment Contracts and Protection of
Foreign Investment; 341
-Stability of Oil and Gas Exploration and Production Contracts; 341
-Legal Perspectives on Stability of Oil and Gas Contracts; 342
-Renegotiation of Investment Contracts; 346
-Protection of Foreign Investment; 347
-Admission of the investment; 347
-Fair and equitable treatment; 350
-Full protection and Security; 351
-Expropriation of Foreign Investment; 353
Corporate Environmental Responsibility and Corporate Social
Responsibility of Oil and Gas Corporations; 357
-Corporate Environmental Responsibility; 357
-Corporate Environmental Responsibility of Oil and Gas Corporations under
Nigerian and International Law; 358
-Nigerian Legal Provisions; 358
-International Legal Provisions; 366
-Environmental protection clauses in oil and gas contracts; 367
-Compliance with domestic and international standards; 367
-Environmental Impact Assessment Clauses; 368
-Clauses on Access to Protected Areas; 368
-Clauses on Access to Water & Other Natural Resources; 369
-Clauses on Gas Flaring; 370
-Clauses on Responding to Emergencies and Accidents; 370
-Clauses on Liability, Indemnity, & Insurance; 371
-Clauses on Decommissioning & Remediation; 371
-Corporate Social Responsibility; 372


PART D: Downstream Oil and Gas Issues, Law and
Policy
Refining of Petroleum and Processing of Gas; 381
-Petroleum Refining; 381
-Processing units used in refineries; 382
-Auxiliary Facilities Required in Refineries; 383
-The crude oil distillation unit; 384
-Construction and Operation of Oil Refinery; 385
-Application for refiner’s licence; 386
xxii -Operating and maintaining an oil refinery; 387
-Expiration and Revocation of refiner’s licence; 388
-Offences under the Act; 388
-Registers of Licences and Memorials; 391
-Deregulation of the Downstream Petroleum Sector; 391
-Regulation of the Downstream Gas Sector; 392
-Processing of Gas; 396
Marketing of Refined Petroleum and Gas; 397
-Marketing of Refined Petroleum; 397
-Marketing of Processed Gas; 398
-Gas Pricing Policy; 398
-Strategic Domestic Sector; 398
-Strategic Industrial Sector; 398
-The Commercial Sector; 398
-The Domestic Gas Supply Obligation; 399
-The Gas infrastructure Blueprint; 400
-The Western Gas Transmission System; 400
-The South-North Gas Transmission System; 400
-The Interconnector System; 401
-Domestic Gas Market; 401
-Offtake Agreements; 403
-Toll Agreements; 403
Transportation of Refined Petroleum and Processed Gas; 405
-Transportation of Refined Petroleum; 405
-Transportation of Processed Gas; 405
-The West Africa Gas Pipeline; 406
-Trans-Sahara Gas Pipeline; 407
Exportation of Crude Oil and Gas; 409
-Exportation of Crude Oil; 409
-Exportation of Gas; 410
Importation of Refined Oil and Processed Gas; 413
-Importation of Refined Oil; 413
-Importation of Processed Gas; 414


PART E: Economic, Political, Environmental and Social
Impacts of the Nigerian Oil and Gas Industry
Economic and Political Impact of the Oil and Gas Industry;
417
-Economic impact; 417
-Onshore/Offshore Dichotomy Abolition; 418
-Political impact; 419
-Corruption; 420
xxiii Environmental and Social Impacts of Oil and Gas Industry on
Host Communities; 423
-Niger Delta Region; 423
-Oil Production and Environmental Pollution; 423
-Illegal Refineries; 423
-Oil Spills; 424
-Gas Flaring; 429
-Reasons for gas flaring in Nigeria; 431
-Litigation; 433
-Oil Producing States litigation against each other and revenue derivation
litigation by States against the Federal Government; 433
-Environmental Litigation by Host Communities; 435
-Onshore Litigation; 435
-Forum Non Conveniens; 442
-Offshore Litigation; 446
-Bowoto v. Chevron Corp; 448
Topical Issues in the Oil and Gas Industry; 465
-Global warming; 465
-Clean Development Mechanism; 465
-Cap and Trade; 466
-Carbon capture and Storage; 467
-New Trends in Oil and Gas Exploration; 467
--GGlloossssaarryy;; 446688 --GGlloossssaarryy;; 446688
-Appraisal Drilling; 468
-Appraisal Well; 468
-Capillary Action; 468
-Contract Close Out; 468
-Christmas Tree; 468
-Condensate; 468
-Drilling Bits; 469
-Decommissioning and Abandonment of oil and gas facilities; 469
-Drilling Mud; 469
-Drill Rod; 469
-Drill Stem; 469
-Drill Stem Test; 469
-Drill String; 469
-Dry/Lean Gas; 469
-Elephant Reserves; 469
-Engineering, Procurement and Construction (EPC); 469
-Enhanced Oil Recovery (EOR) techniques; 470
-Environment Defence Fund; 470
-Flow station; 470
-Flow Station Deferment; 470
-Formation Fluids
-FLNG; 470
xxiv