It cannot be denied that the Oil and Gas industry still commands the most government attention in Nigeria and countries all over the world despite the emergence of the Alternative Fuels/Green Energy sectors.
It thus follows logically that this sector/industry is highly regulated, with the President in most cases acting directly as the Minister of Petroleum Resources and a very vast list of procedures and guidelines following the new Petroleum Industry Act (PIA) 2021.
So, if you are seeking to get into the industry as filling station or Cooking Gas cylinder retailer or by securing an Oil Prospecting Licence (OPL) or an an Oil Industry supporting service expert, you need to have a clear understanding of the licenses, guidelines and procedures applicable to your line of business as well the regulatory bodies regulatory agencies governing the Oil and Gas industry in general.
This article aims to achieve the following objectives:-
– Provide a clear understanding of Oil and Gas industry license categories in Nigeria.
– Provide a clear list of specific license & permit requirements.
– Provide a clear picture of the guidelines applicable to a particular subsector of the industry .
– Provide a clear understanding of the regulatory bodies in charge of the Oil and Gas Industry.
Which Government agency/agencies are in charge of regulating the Oil & Gas Industry?
The agency in charge of regulating the Oil & Gas Industry was formally in Department of Petroleum Resources (DPR) but its functions have now been inherited between the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), mainly dealing with the Upstream Oil sector (prospecting, exploration drilling, & related technical certifications), and the Nigerian Midstream & Downstream Petroleum Regulatory Authority (NMDPRA), which deals with licensing and permits in the Downstream (retail, storage and related services) Oil /Gas sector.
What are the specific permit categories of the NUPRC ?
The permit categories of the NUPRC are:
1. General Purpose Permits – This deals with the permit to engage in Minor Supply, Works & Maintenance services which do not require specialized or certified competencies.
Applicants are to choose not more than 1 service/job from 3 classifications. Not more than 2 services can be chosen under the works classification.
The job groups under this category are-
a). Works (artisans) – Minor welding, minor Plumbing, minor painting and photographer jobs.
b). Maintenance (artisans) – Minor civil, minor mechanical & minor electrical maintenance jobs.
c). Supply – Minor civil maintenance materials, minor mechanical maintenance materials, minor electrical maintenance materials, plumbing materials, minor computer accessories/consumables, welding materials, minor catering services (provision of snacks and beverages for meetings).
d). Other sub-categories as may be determined by the commission.
2. Major Category – Applicants under this category are required to have relevant & verifiable technical/special skills. Job groups in this category include Consultancy, Aviation support, Laboratory, Protocol and Logistics groups.
3. Specialized Category – Applicants under this category are required to possess relevant & verifiable technical/special skills and this category also comes with job categories like Offshore pipeline laying and construction, Onshore pipeline laying & construction.
Are NUPRC permits renewable?
Yes. Oil and Gas Industry permits and licences usually require annual renewal.
What requirements do i need to get a new or renewed NUPRC permit?
You need the following requirements:-
– Copies of your company’s Certificate of Incorporation and your Memorandum/ Articles of Association.
– Your Tax clearance certificate.
– Your list of available equipments and facilities.
– Your receipt of payment od your employees’ compensation scheme (payable to the NSITF/Nigerian Social Insurance Trust Fund).
– A copy of your company’s Medical retainership agreement with a hospital.
– A copy of your Company’s profile.
– Your company’s staff list along with the positions and qualifications of each staff.
– An NUPRC- endorsed expatriate quota request where applicable.
– A list of approved expatriate quota positions and their Nigerian understudies where applicable.
– Proposed training program details for your Nigerian staff for the current year.
– Proof of registration by a relevant professional body where applicable.
– A copy of your Technical agreement or Memorandum of Understanding with a Nigerian company or accredited laboratory where applicable.
– A detailed Health, Safety, Environment (HSE) & Community management system.
How are applications made and how long do they take to be processed?
Applications can be made offline or online on the NUPRC portal and usually take an average period of 72 hours to be processed, thought this can be longer for Specialized Category applications.
You should note also that applications with false or forged documents will be disqualified as well as forfeiting their remitted fees and possible consequent criminal prosecution.
Do permit applications come with site inspections?
Yes they do. The NUPRC is entitled to conduct facility inspection and assessment exercises regarding applications under the major and specialized categories before considering the issuance of permits. Inspections can also be conducted on companies whose permits have not been renewed for 3 years minimum before a new application is made.
Applicant companies must have a physical presence in Nigeria and inspections can occur without notice and without any prejudice to permit grants or approvals already in existence.
How much are the Statutory Permit Fees charged by the NUPRC and how are they to be paid?
The fees are as follows :-
- General category – 5,500.00 Naira (Processing fee included).
- Major category – 27,500.00 Naira (Processing fee included).
- Specialized category – 257,500.00 Naira (Processing fee included)
Payments can be made offline or through the NUPRC portal or via Remita.
Okay. I would like to start-up and run a filling station that can sell PMS(Premium Motor Spirit), Dual Purpose Kerosene (DPK) , Automated Gas Oil/Diesel (AGO),as well as filled up Cooking Gas cylinders. How do i go about this?
Before i answer this, i should let you know that unauthorized dealing in the above-mentioned products without a license is criminal and can earn you a lifetime jail sentence.
Now, getting licensed/permitted to set up & run a filling station is governed by the NMDPRA and is in the following stages :-
Stage 1 – Suitability Inspection
– First consult with your lawyer and then instruct him to prepare and submit an application to the NMDPRA for site suitability approval and pre-approval inspection which shall among other issues report on the following requirements-
a). The size of the proposed land site.
b). The site must not lie in proximity to a pipeline or an electric power High Tension cable Right of Way (ROW).
c). The distance from the edge of the road to the nearest pump must not be less than 15 metres.
d). The total number of petrol stations within a 2km stretch of the site on both sides of the road must not be more than Four(4) including the one under consideration.
e). The distance between an existing station and the proposed one will not not be less than 400 metres.
f). The drainage from the site will not go into a stream or river.
g). In some instances where the site is along a Federal highway a letter of consent from the Federal Ministry of Transportation is required.
h). A NMDPRA guided/supervised Environmental Impact Assessment (EIA) study of the site by an NMDPRA-accredited consultant is also required.
Stage 2– Approval to Construct
If the suitability report is favourable, the following documents shall be require for submission to NMDPRA for review without any obligation to grant an Approval to Construct (or ATC) if any negative change or development affecting the suitability of the site occurs before the ATC grant. This stage comes with the following requirements :-
I).An application to the operations controller of the NMDPRA Zonal/Field office nearest to where the site is located. To this application the following should be attached –
a). 2 copies of your company’s Certificate of Incorporation.
b). 2 copies of your company’s Memorandum/Articles of Association.
c). 2 copies of your company’s current Tax clearance.
d). Original and duplicate copies of a police report.
e). Original and duplicate copies of a Fire report & certificate.
f). 2 original copies of the site’s approved building plan.
g). 2 copies of a letter from the Land & Survey office/Surveyor-General’s office.
h). 2 copies of the Deed of Assignment/Conveyance through which you acquired the Land site.
i). An Environmental Impact Assessment (EIA) report for underground storage tank capacities greater than 270,000 litres.
II). After the ATC is granted it is mandatory that some meaningful development be made on the site within 3 months from the approval grant date. The approval will expire if no development commences within the time frame
III). A sign post should be installed on the site immediately after the ATC is granted. The signpost should indicate the name of the company and the reference number on the approval letter.
IV). Companies involved in the building of Petrol stations, construction and fabrication of U/G (Underground) storage tanks and canopies shall procure NMDPRA permits to operate as Oil Industry Service companies.
Stage 3– Application for Storage/sales & license grant to operate a Petrol station after ATC & construction of the station during which it is mandatory to invite officers of NMDPRA to witness the burial and pressure/leak test of the U/G tanks. The requirements for this license are –
a). A minimum of 3 U/G storage tanks( 1 each for PMS, DPK and AGO).
b). A minimum of 3 dispensing pumps (1 each for PMS, DPK and AGO).
c). An office building made up of 2 offices, sales room, toilet, Lube bay, Store(optional).
d). Well concreted forecourt with “IN/OUT” driveway inclusive.
e). Wall fence demarcating the station (with the minimum height being 1.5m).
f). Good drainage network.
g). Safety facilities (fire extinguishers, sand buckets, strategic display of “NO SMOKING” warning signs).
h). Station sign post/logo of company/outlet.
i). Standard canopy over PMS pumps (mandatory) with company name and logo boldly written.
j). Standby generator.
h). Accessible potable water source.
l). Standard (51″ × 30″) price billboard with changeable price mechanism.
Required Documents for this stage
- Products U/G tanks pressure test report/certificate and leak detection test (original printout).
- Photographs of the station (8″ × 10″, not computer-generated), snapped from different angles such that in/out driveways, pumps and other facilities are clearly shown.
- Current Fire certificate.
- Application form with bank draft(payment sum depends on storage capacity).
- Evidence of trained attendants.
- Application letter addressed to the operations controller, NMDPRA.
Stage 4– Takeover of Petrol station (where a filling station of one company is bought by another filling station company) .
In addition to the requirements and procedures already mentioned above, the following documents will be required:-
- 2 copies of the buyer company’s Certificate of Incorporation.
- 2 copies of the buyer company’s Memorandum/ Articles of Association.
- 2 copies of the buyer company’s current Tax clearance.
- Original and duplicate copies of buyer company’s current fire service report & certificate.
- 2 original copies of the site approved building plan.
- Original copy of previous storage and sales license.
- Original and duplicate copies of Pressure test certificate/leak detection test report printout.
- Evidence of trained pump attendants.
- A filled application form with a Bank draft depending on the total storage capacity applied for.
- A receipt of purchase by the buyer company or a Management agreement to that effect where the takeover is in the form of an outright purchase of the filling station by the buyer company.
- A letterheaded release letter from the selling company.
- Photographs of the station taken from different angles showing :-
– station’s name;
– a fire extinguisher and sand bucket on each dispensing pump island;
– a price billboard measuring 5″ ×30″ with points size 6″ × 3″ ;
– clearly demarcated drive-in/out ways.
– “NO SMOKING” signs conspicuously displayed in the station;
(Where photocopies of documents are required, the originals should be tendered for sighting and returned to the applicant).
Stage 5 – In addition to the stages and requirements mentioned so far, the following requirements are also mandatory:-
- Functional fire-fighting gadgets must be kept handy and at alert.
- Ensure that a station manager/supervisor is always at the station.
- Always make available alternative power sources to operate product pumps and adequate illumination of the station.
- Products are to be sold at prevailing government-approved prices.
- Product pumps must dispense accurate product amounts as well as display volumes and prices clearly.
- Pump attendants must be trained and dressed in safety gear constantly.
- It must be ensured that vehicle engines are switched off before fueling.
- In addition to “No Smoking” signs, “No use of cellphone” signs must also be conspicuously displayed in the station.
- Stations must always maintain good housekeeping.
- Tanker trucks are to be earthed throughout products discharge.
- A copy of each waybill for products on sale have to be available at the station at all times.
- Products in tanker trucks to be discharged into storage tanks have to be allowed to settle for at least 2 hours while in the station before the discharge.
- The company’s storage and sales license has to be put on display in the station’s office.
- NMDPRA inspections log books have to be constantly available.
- Unrestricted access must be given to NMDPRA officials to carry out their statutory functions in the station.
The requirements will be without prejudice to the additional requirements for setting up such businesses put in place by state government agencies such as the Lagos State Safety Commission.
Okay. What do i need to do if i want to go into the business of refilling and retailing Liquified Petroleum Gas(Cooking Gas)?
For this, you need to first consult with your lawyer to advise you on the regulatory framework for Downstream Gas Services which is mainly the Guidelines for the Establishment of LPG Refilling facilities and Retailing Outlets in Nigeria and then instruct him to commence your license application on the NMDPRA portal.
An LPG refilling facility is one which can store LPG in bulk at licensed locations for the purpose of sale directly to end users or retailers who are licensed separately under Category D(or CAT D).
The procedures to follow apart from paying the required Statutory and Regulatory Fees are :-
– Applying for Site suitability approval which if granted will last 18 months before expiring.
– If your Site suitability approval application is granted, you then apply for an Approval to Construct or Install (ATC/ATI) which if granted will last 30 months.
– If your application for an Approval to Construct is granted, you then apply for a License To Operate (LTO) an LPG Refilling facility which will come with a Pre-licensing inspection of your facility by NMDPRA officials.
To get an LPG Retailing Licence (Category D) you should also consult with your lawyer on the applicable guidelines and have it in mind that any retail outlet must have a product storage minimum total capacity of 500kg .
This Licence application involves:-
– Commencing your company registration on the NMDPRA portal.
– Paying all Statutory application and licensing fees.
– Uploading all required documents.
– A possible Pre-licensing outlet inspection by NMDPRA officials.
Do NMDPRA licenses and permits require renewal as well?
Yes, they do.
There are other areas of the Upstream Oil and Gas Industry that i would like to venture into later. What do i need to about these subsectors? And can you give me a detailed list of the applicable rules , regulations and guidelines governing these subsectors?
The Regulatory Framework governing the Oil and Gas Industry is very vast and cannot be exhaustively described in this article, especially with the enactment of the relatively new Petroleum Industry Act 2021.
The most important guidelines, requirements,rules and regulations governing the Upstream Oil and Gas Industry which you must consult your lawyer on before venturing into those areas include the following :-
OIL
– Rules for securing the Minister’s consent for assignment of interests in Oil and Gas assets(mainly for those seeking Oil Prospecting/Exploration licenses or Oil Mining Leases/OMLs).
– The Procedure guide for the construction and maintenance of surface product facilities.
– The Procedure guide for the construction and maintenance of fixed offshore platforms.
– Guidelines for the award of operations of marginal fields in Nigeria.
– Oil Bloc Allocations to Companies(Back-in Rights) Regulations.
OIL & GAS TERMINAL OPERATIONS
– Procedure guide for the determination of the quantity and quality of Petroleum & Petroleum products in Nigeria.
GAS
– Gas exploration and development permit requirements.
– Rules on Utilization of Oil and Gas fields.
– Extended Well Test (EWT) rules.
– Guidelines for Flare Gas measurement, Data management and reporting obligations.
– Guidelines for the grant of permits to access Flare Gas.
– Guidelines for Flare payments.
– Guidelines for the production of Associated Gas Utilization projects.
– Gas Production & Flares reporting template.
HSE/ General
– Guidelines and Procedures for travel to offshore/Swamp locations and the obtaining of offshore safety permits.
– Guidelines for Compliance with the Technical Safety Control (TSC) requirements.
– Guidelines for the implementation of risk-based inspection on the Nigerian Oil and Gas Industry.
– Lifting equipment and lifting operations guidelines and procedures.
– Guidelines for the release of staff in the Nigerian Oil and Gas Industry 2019.
– Guidelines and requirements for the application of Oil and Gas Industry Services Permits (OGISP).
– Requirements for the maintenance and inspection of flexible pipes, SCRs and mooring chain systems.
– Safety case guidelines for Oil and Gas Facilities in Nigeria.
– Guidelines for work at height and confined space entry.
– Guidelines for the establishment and operations of safety & emergency training.
– Guidelines and Procedures for the construction, operations and maintenance of pipelines
Conclusion
The major dependence of the Nigerian economy on the Oil and Gas Industry isn’t exactly something to be proud of in 2022, but Fossil energy will be around for a very long time to come and remains a very lucrative, but also very regulated industry not just in Nigeria, but worldwide.
It is thus very wise and necessary to have a clear understanding of the Regulatory Framework governing this industry and having close by, dependable and diligent legal counsel to enable you make better business decisions before, during and after your initial venture into this sector going forward.
