Introduction
Longstanding Nigerian oil and gas policy dating from the award of oil and gas blocs to indigenous companies in the early 1990s specified in the letters of award that an awardee could not farm out more than a 40% equity interest in the asset to a foreign-owned company. This led to the general regulatory practice that a foreign-owned company could have an economic interest higher than 40% in a licence or lease, but not a higher equity interest. An additional layer of indigenous preference policy was added by Section 3 of the Oil and Gas Industry Content Development Act 2010, which provides that Nigerian independent operators will be given first consideration in the award of, among other things, oil blocs and oilfield licences. The act also defines a Nigerian company as one that has no more than 49% foreign ownership. These indigenous preference policies will not be affected by the passage of the Petroleum Industry Bill.
The existing rates of 10% for deep offshore and 7.5% for frontier basins are unchanged.
Crude oil by price: 0% for an oil price of below US$ 50 per barrel, 5% at an oil price of US$ 100 per barrel and 10% for above US$ 150, with linear interpolation between these markers. These rates are for 2020 and are to be increased by 2% each year. No royalty is payable in frontier acreage.
Grandfathering or voluntary conversion of existing licences:
Last year also saw proposed changes to Nigerian content requirements. The Nigerian Content Development and Enforcement Bill (Bill) proposed to repeal and replace the Nigerian Oil and Gas Industry Content Development Act 2010. Important changes in the draft Bill we saw included the end of charging of the content development levy, with the Board to instead receive funding from the Government (however the power and solid mineral industries will face content levies). However, this Bill has not yet become law.
Friday, January 22, 2021
We review what happened in Nigeria’s upstream petroleum sector during the previous year – a year that saw a new marginal field bid round, an oil price crash and the onset of a terrible global pandemic. We also consider what we can expect in 2021 and if this will be the year the Petroleum Industry Bill finally overhauls the sector.
What happened in legal matters?
Upon his re-election in 2019, President Buhari set out an ambitious plan to pass the Petroleum Industry Bill (PIB) by the end of 2020. He did not achieve that. However, progress was made: the PIB
passed its second reading in both the Senate and the House of Representatives in Nigeria in Q4 2020 and is now under committee review.
Friday, January 22, 2021
We review what happened in Nigeria’s upstream petroleum sector during the previous year – a year that saw a new marginal field bid round, an oil price crash and the onset of a terrible global pandemic. We also consider what we can expect in 2021 and if this will be the year the Petroleum Industry Bill finally overhauls the sector.
What happened in legal matters?
Upon his re-election in 2019, President Buhari set out an ambitious plan to pass the Petroleum Industry Bill (PIB) by the end of 2020. He did not achieve that. However, progress was made: the PIB
passed its second reading in both the Senate and the House of Representatives in Nigeria in Q4 2020 and is now under committee review.
Sometime ago, I published
Musings I). Originally published in my Taxspectives column in Why
Government Must Acquire a Business Mindset. ), it is
also available as a
LeLaw Thought Leadership Insights
piece amongst others at: www.lelawlegal.com. Subsequently, the
Nigerian Immigration Act, No. 8 of 2015
(IA), was enacted, repealing its predecessor,
IA,
The
Immigration Regulations 2017 issued pursuant to the
IA followed; and most recently, the
Ministry of Interior (MoI) s
Citizenship and Business
Department issued the
Handbook on Expatriate
Quota Administration (Revised 2020) (the
Handbook).
This sequel takes up my argument in
Musings
I that the requirement of Business Permit (BP)