Oil and Gas Law in Nigeria simplified Yinka Omorogbe MALTHQUSE PRESS LTD Lagos, Benin, Ibadan, Jos, Oxford
Contents Topic I: Introduction to the course Introduction Petroleum The importance of petroleum Energy Other sources of energy The international oil industry Integration How oil was found Refining Terms commonly used Topic II: The Nigerian oil industry A historical perspective Legislation governing the industry The Petroleum Act 1969 The Petroleum (Drilling and Production) Regulations 1969 Other legislation Some facts about the Nigerian oil industry 1 1 1 3 4 5 6 7 7 9 13 15 16 16 19 20 24 25 25 29
x Oil and gas law in Nigeria Topic III: Ownership of oil and gas 30 Ownership theories in the oil and gas industry 31 Permanent sovereignty over natural resources and emergent international law 34 37 Topic IV: Contracts for exploration and production 38 Exploration and production contracts 38 The concession: 39 a) the tfaditional concession 39 b) the modern concession 40 The risk Service contract 42 The pure Service contract 43 Technical assistance agreements 44 Participation and Joint ventures 45 Legal relationships in the Nigerian oil and gas industry 46 The Joint venture 47 i) The participation agreement 47 ii) The operating agreement. 48 The production sharing contract 49 Current Nigerian production sharing contracts 50 The Service Contract 53 53 Topic V: The natural gas industry 55 The international natural gas market 55 The Nigerian market for natural gas 56 Natural gas contracts 57 Gas flaring in Nigeria 58 The fiscal regime 60 Natural gas projects 60 64
Contents xi Topic VI: Fiscal matters pertaining to the petroleum industry 65 Fiscal matters relating to crude oil 65 - Participating interest percentage 65 - Production sharing percentage 66 - Taxes 66 - Royalties 71 - Bonuses 72 - Rents 73 Fiscal matters relating to natural gas 74 The memorandum of understanding (MOU) 77 79 Topic VII: OPEC 80 History, aims and objectives 80 Membership 82 Organs of OPEC 86 Departments of OPEC 90 The OPEC Fund for International Development 91 OPEC and its contribution to the development of oil and gas law 93 AcriticalevaluationofOPEC 94 95 Topic VIII: National Oil Corporations and the Nigerian National Petroleum Corporation 96 History 96 Rationale for the establishment of the NOC 97 The Nigerian National Petroleum Corporation 99 106
xii Oil and gas law in Nigeria Topic IX: Downstream oil and gas law and policy 107 Histoncal perspective 107 Transportation 108 Refining 111 Marketing 113 Petrochemicais 114 117 Topic X: Trade in crude oil and products Historical perspective Crude oil contracts Term contracts Spot and forward market Tfade in products in Nigeria Bunkering 118 118 120 121 123 125 125 126 Topic XI: Environmental issues 127 Types of pollution 127 Greenhouse gases, climate change and the ozone layer 128 Oil industry pollution in Nigeria 133 Legal regulation of the Nigerian oil industry 135 The FEPA Act and other laws 137 Supervision and monitoring 141 142 Topic XII: Oil Community issues 143 The right to development 144 Rights over natural resources 146
Contents xiii Rights for injuries suffered as a result of oil industry activities. 151 Litigation 154 157 Topic XIII: Topical issues in the petroleum industry 158 The acquisition of technology 158 Indigenous oil companies 164 Marginal fields 170 The utilisation ofrevenues earned from petroleum 175 - The Petroleum (Special) Trust Fund 175 177 Topic XIV: Nationalisation and privatisation 178 Nationalisation 178 Privatisation 182 Methods of privatisation 185 Privatisation in Nigeria 187 A comparison of nationalisatiori and privatisation 190. 191 Topic XV: Dispute settlement 192 Types ofdispute settlement 192 194 Revision questions 196 Index 205