By Chidiebere Ugwu
Oil and gas companies are now required to register for midstream and downstream operations separately, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) has said.
The Authority Chief Executive, Farouk Ahmed, who disclosed this on Wednesday in Abuja via a letter to oil and gas chief executives which had ‘NMDPRA/OACE/EXC.14/2023/05’ as the reference number, explained that the directive is aimed at strengthening the implementation of the Petroleum Industry Act (PIA).
He said: “to ensure effective implementation of the overall objectives of the PIA, enable arm’s length transfer dealing, and to deepen the midstream and downstream sectors of the industry for the benefit of the Nigerian people, all holders of subsisting leases, licenses and permits that are engaged in midstream and downstream petroleum operations are hereby directed to register and use separate companies for each stream operation under the Act in line with Sections 212 and 302(3) of the PIA on or before 31 August 2023.”
Warning oil and gas firms against illegal practices, Ahmed stressed that non-compliance with the law will attract sanctions.
“Where a person engages in any of the activities in items 5(a-d) above without license or permits from the Authority, appropriate sanctions shall be applied to such person in line with Sections 125 (4) (a-e), (5), and 174 (4) (a-d) (5) (a-b) of the PIA,” he warned.
The letter, ‘Deepening of Nigerian Midstream Petroleum industry through the creation of separate midstream entities – industry circular on implementation of Petroleum Industry Act 2021’ dated 11th July 2023 was equally sent to all the Managing Directors/CEOs or all oil and gas exploration and production companies, all oil and gas midstream companies, all operators of oil and gas export terminals, and all oil and gas industry servicing companies.
Ahmed maintained that the NMDPRA is the regulator for technical and commercial operations of the midstream and downstream petroleum industry, which includes operations and activities in downstream of the measurement point of the petroleum mining lease, whether or not related to the petroleum mining lease in line with Section 318 of the PIA, while the Nigerian Upstream Petroleum Commission (NUPRC) is responsible for the technical and commercial (as limited by Section 8 (a) of the PIA) regulation of upstream petroleum operations which includes activities upstream the measurement point, related to the winning and disposal of petroleum at measurement points.
He noted that the Authority is aware that the NUPRC has issued directives which have a direct impact on midstream and downstream petroleum operations without consulting with the Authority as required by the provisions of Section 48 (l) of the PIA; stressing ‘You are by this letter directed to disregard any such directives as it conflicts with the PIA’.
Specifically, Sections 125, 132, 135, and 174 of the PIA state activities require licenses from the NMDPRA while Section 70 of the PIA states the licenses that may be issued by the NUPRC under the Act.
He added that the PIA, without ambiguity, requires that the NMDPRA shall provide regulatory oversight and issue licenses to establish, construct and operate all midstream natural gas processing facilities, installations for storage of natural gas, gas transportation pipeline facilities for bulk transportation of natural gas by rail, trucks and barges, facilities for bulk storage of natural gas, gas transportation networks, terminal, jetty or other facility for export or bulk sales of gas, in line with Section 125 (I) (a-h) of the PIA.
The law also gives the Authority the powers to licenses to establish, construct and operate all terminals in line with Sections 125(1) (f) and 174 (1) (a) of the PlA notwithstanding the provisions of Section 7 (ee) and 8 (d).
According to him, the other section is the wholesale gas supply and wholesale petroleum liquids supply license in line with Section 142 (1), (2) (3) and 197 (1), (2) (3) of the PlA respectively, which is a pre-requisite for the issuance of export permit or domestic supply to off-takers.
The Authority is also empowered to issue licenses to establish, construct and operate all midstream petroleum liquid facilities including refineries, pipelines for bulk transportation of petroleum liquids, facilities for bulk transportation of petroleum liquids by rail, trucks and barges facilities for bulk storage of petroleum liquids transportation networks, bulk sales of petroleum liquids. petrochemical and lubricants production facilities etc. in line with Sections 174 (1) (b) (h).
