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Transport and storage
What is the general legal framework governing the transportation and storage of oil and gas resources in your jurisdiction?
Oil and gas resources are primarily transported via pipeline networks that connect several fields and lead to storage tank farms, refining-petrochemical facilities or oil terminals for onward shipping.
The Oil Pipelines Act and Oil and Gas Pipelines Regulation govern the operation of petroleum pipelines. The grant of a licence is preceded by a survey of the proposed pipeline route, which is conducted with the minister of petroleum’s permission.
The Petroleum (Drilling and Production) Regulations require licensees and lessees to use approved methods and practices for the storage of petroleum obtained from relevant areas of operations.
In order to determine fiscal obligations, licensees or lessees are required by the Petroleum (Drilling and Production) Regulations to act in accordance with the Department of Petroleum Resources’ Procedure Guide for the Determination of the Quantity and Quality of Petroleum and Petroleum Products in Nigeria. The guide describes methods to be used and standards to be complied with in carrying out quantity and quality measurements for liquid petroleum and petroleum products at designated facilities, as well as procedures for the calibration and certification of measuring equipment.
The Oil Terminal Dues Act is relevant to the export of crude oil. It provides for the levying and payment of terminal dues by vessels evacuating crude oil at terminals in Nigeria. The act also prohibits the installation and operation of oil terminals, except with the written approval of the minister of petroleum, among other requirements.
Crude oil is evacuated at oil terminals by ocean tankers that must comply with the Crude (Transportation and Shipment) Regulations which, among other things, require all declarations regarding the capacity of a vessel in which crude oil is carried to be verified by the appropriate government authority.
How is cross-border transportation of oil and gas resources regulated?
Cross-border transportation is generally governed by the contract between the vessel owner and the charterer on standardised terms of international time or voyage charter contracts.
A petroleum exporter will also require export permits issued by the Department of Petroleum Resources and the Federal Ministry of Industry, Trade and Investment to export oil or gas.
The Pre-shipment Inspection of Exports Act subjects exports from Nigeria (including crude oil exports) to inspection by pre-shipment inspection agents. The act also requires exporters of goods, including petroleum products, to open, maintain and operate a foreign currency domiciliary account in Nigeria, into which all export proceeds must be paid.
Are there specific provisions governing marine and ground transportation of oil and gas resources?
Please see above.
Further, the Coastal and Inland Shipping (Cabotage) Act restricts the use of foreign vessels for the carriage of goods within coastal territorial inland waters, or any point within the waters of Nigeria’s exclusive economic zone. The act also restricts vessels, tugs or barges that are not beneficially owned by a Nigerian citizen from the carriage of materials or supply services to and from oil rigs, platforms and installations, whether offshore or onshore or within any ports in Nigerian waters.
Construction and infrastructure
How are the construction and operation of pipelines, storage facilities and related infrastructure regulated?
The Oil Pipelines Act empowers the minister of petroleum to grant permits to survey routes for pipelines and, thereafter, issue licences to construct, maintain and operate such pipelines, together with any ancillary installations necessary for the operation of oil pipelines, including storage tanks, pumping stations and loading terminals.
The Oil and Gas Pipelines Regulations and the Department of Petroleum Resources’ Guidelines and Procedures for Construction Operation and Maintenance of Oil and Gas Pipelines prescribe, at length, standards to be adhered to in the design, construction, operation, maintenance and upgrade of petroleum pipelines in Nigeria.
The department’s Procedure Guide for the Construction and Maintenance of Fixed Offshore Platforms and Procedure Guide for the Design and Construction of Oil and Gas Surface Production Facilities prescribe standards for the design, construction, commissioning, maintenance and decommissioning and abandonment of certain facilities, depending on the nature of the related infrastructure.
Other notable legislation includes the Mineral Oils (Safety) Regulations and the Environmental Impact Assessment Act.
What rules govern third-party access to pipelines and related infrastructure?
The Oil Pipelines Act provides for the grant of third-party access rights subject to ministerial approval. Any party that requires access to a pipeline can apply to the minister of petroleum, who considers such applications in consultation with the applicants and pipeline owners. Where satisfied that the pipeline can be operated efficiently, the minister will approve the application and the parties will agree conditions for use of the pipeline, failing which, the minister may determine such conditions.
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