Oil and gas regulation in Nigeria

Regulatory overview

Regulation

What are the primary laws and regulations governing the oil and gas industry in your jurisdiction?

The Constitution vests control of all minerals, mineral oils and gas in, under or on any land in Nigeria and its territorial waters and exclusive economic zone in the government, to be managed in the manner prescribed by the National Assembly.  

The Petroleum Act is the principal statute that governs petroleum operations, including exploration, production and use. It vests ownership and control of all petroleum exclusively in the government and the exercise of the powers consequent on this title in the minister of petroleum resources. Qualified persons wishing to carry out any form of petroleum operations can do so only on the basis of authorisation granted by the minister. The Petroleum Act and its subsidiary legislation, including the Petroleum (Drilling and Production) Regulations, the Petroleum Regulations and the Petroleum Refining Regulations, govern petroleum operations in Nigeria including, but not limited to, exploration, development, production, storage, transportation, refining and marketing.

The Oil Pipelines Act and the Oil and Gas Pipelines Regulations provide the legal and regulatory framework for the establishment, operation and maintenance of pipelines that are incidental and supplementary to oil and gas operations in Nigeria.

The Deep Offshore and Inland Basin Production Sharing Contracts Act prescribes fiscal incentives for companies operating in the deep offshore and inland basin areas of Nigeria under production sharing contracts.

The Nigerian National Petroleum Corporation Act establishes the Nigerian National Petroleum Corporation, which participates in petroleum operations on behalf of the government.

The Nigerian Oil and Gas Industry Content Development Act aims to enhance the development of indigenous capacity across the Nigerian oil and gas industry. It sets minimum Nigerian content prescriptions for various services and requires that first consideration be provided to companies incorporated in Nigeria (ie, with 51% of equity owned by Nigerian parties) in the award of oil blocks and licences. Nigerian companies with the relevant equipment and capacity to execute work on land and swamp-operating areas must be given exclusive consideration to bid for work in such areas.

Which government bodies regulate the oil and gas industry and what is the extent of their powers?

 The Ministry of Petroleum Resources (headed by the minister of petroleum resources) is:

• responsible for policy formulation and regulating the Nigerian petroleum industry; and
• empowered to authorise petroleum activities (eg, leases, licences and permits).

The minister acts primarily through the Department of Petroleum Resources, which carries out routine oversight and compliance monitoring functions.

The Nigerian Content Development and Monitoring Board, established by the Nigerian Oil and Gas Industry Content Development Act, supervises, coordinates, administers and monitors the implementation and development of Nigerian involvement in the oil and gas industry.

Other agencies involved in the regulation of the oil and gas industry include the Federal Ministry of Environment and the National Oil Spill Detection and Response Agency.

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