Petroleum Industry Act, no. 6 of 2021

1. Vesting o.(Petroleum.

2. Objectives. PART JI-MINISTER OF PETROLEUM

3. Powers of the Minister. PART IJI-THE COMMISSION

4. Establishment of the Nigerian Upstream Regulatory Commission.

5. Application of this Part.

6. Objectives of the Commission.

7. Technical regulatory functions of the Commission.

8. Commercial regulatory functions of the Commission. 9. functions of the Commission for frontier basins. JO. Powers of the Commission.

11. Governing Board of the Commission.

12. Functions of the Board of the Commission.

13. Remuneration and allowances of the Board of the Commission.

14. Suspension or removal of members of the Board of the Commission.

15. Resignation of a Non-Executive Commissioner.

16. Vacancy on the Board of the Commission.

17. Filling of vacancy on the Board of the Commission.

18. Commission Chief Executive and Executive Commissioners.

19. Employees of the Commission.

20. Terms and conditions of service in the Commission.

21. Remuneration and allowances of employees of the Commission.

22. Statement of estimated income and expenditure of the Commission.

23. Secretary to the Commission.

24. Fund of the Commission. -; t

25. Notice to theCommissio~ ,_\··: ..' A 122 2021 No. 6 Petroleum Industry Act, 202 l

26. Special powers of the Commission.- ., ·<· ·..

27. Special Investigation Unit.

28. Indemnity of officers of the Co_mmission. : . : PART IV-THE AurU6rmy, - ~ . 1, ~

29. Establishment of the Nigerian Midstream and Downstream Petroleum Regulatory Authority.

30. Application of this Part.

31. Objectives of the Authority.

32. Functions of the Authority.

33. Regulations by the Authority.

34. Governing Board of the Authority.

35. Functions of the Board of the Authority.

36. Remuneration and allowances of members of the Board ofthe Authority.

37. Suspension or removal of a member of the Board of the Authority.

38. Resignation of a non-executive member of the Board of the Authority.

39. Vacancy on the Board of the Authority.

40. Filling of vacancy on the Board of the Authority.

41. Authority Chief Executive and Executive Directors of the Authority.

42. Employees of the Authority.

43. Terms and conditions of service in the Authority.

44. Remuneration and allowances of employees of the Authority.

45. Statement of estimated income and expenditure of the Authority.

46. Secretary to the Authority.

47. Fund of the Authority.

48. Notice to the Authority.

49. Special powers oftbe Authority.

50. Special Investigation Unit.

51. Indemnity of officers of the Authority.

52. The Midstream and Downstream Gas Infrastruch1re Fund. PART V- THE NIGERIAN N AT!ONAL PETROLEUJ\,J COMPANY L!ll-lITED

53. Nigerian National Petroleum Company Limited.

54. Tran sfer of assets and Ii abilities.

55. Appointment ofNNPC Limited as agent ofNNPC.

56. Subsistence of guarantee.

57. Transfer of employees and conditions of service.

58. The Board ofNNPC Limited.

59. Composition of the Board ofNNPC Limited.

60. Committees of the Board ofNNPC Limited.

61. Application of principle of corporate governance.

62. Annual audit ofNNPC Limited. Petroleum Industry Act, 2021 2021 No. 6 A 123 63 Responsibilities of the Board ofNNPC Limited.

64. Objectives of:--JNPC Limited.

65. Es tab tishment of incorporated joint venture corn pan ies. I ~~ .j CHAPTER 2~ADMINISTRAT!ON PART 1-GEJ\'ERAL ADMINISTRAT!ON

66. Objectives.

67. Management of petroleum resources. PART II-ADMINISTR,\TlON OF UPSTREAM PETROLEUM OPERATIONS AND ENVlRONMEI\T

68. Administi'ation of acreage and vesting of data.

69. National grid system.

70. Licences and leases.

71. Petroleum exploration licence.

72. Petroleum prospecting licence.

73. Bidding process.

74. Award process.

75. Licensing round guide I ines.

76. Model licence and mode! lease.

77. Duration and area of petroleum prospecting !icence.

78. Work commitment, commercial discovery and significant gas discovery.

79. Commercial discoveiy and field development p!an.

80. Unitisation. 8 l. Petroleum mining leases.

82. Exe Iusi ve right to cond uet operations.

83. Confidentiality.

84. Power to enter into contracts.

85. Model contracts.

86. Duration and renewal of leases and licences.

87. Conditions for renev,a! of petroleum mining leases.

88. Relinquishment.

89. Surrender of licence or !ease.

90. Rights of way relating to upstream petroleum operations.

91. Rights of way reserved for the Commission.

92. Voluntary conversion of an oil prospecting licence to a petroleum prospecting licence or oil mining lease to petroleum mining lease.

93. Relinquishment upon renewal or conversion of an oil mining lease.

94. Marginal field.

95. Assignments, mergers, transfers and acquisitions.

96. Grounds for revocation of Iicence or lease.

97. Notice of default prior to revocation. A 124 2021 No. 6 Petroleum JndushJ• Act, 202 l

98. Administration of a revoked producing lease.

99. Power ofrevocation ofparticipating or shareholders interest. l 00. Fees, royalties, rents and other payments to Government. l OI. Damage to protected and venerated objects.

102. Environmental management.

103. Financial contribution forremediation of environmental damage. I 04. Gas flaring penalties.

105. Prohibition offlaring or venting ofnatural gas.

106. Measurement offlared natural gas.

107. Exemption.

108. Natural gas flare elimination plan.

109. Domestic crude oil supply obligations.

110. Domestic gas delivery obligations. PART III-GENERAL ADMIN1STRATION OF MIDSTREAM AND DOWNSTREAM PETROLEUM OPERATIONS· I 11. Matters relating to licence applications.

112. Advertisement oflicence applications.

113. Licensing regulations.

114. Conditions in licences or pem1its. I 15. Compensation for acquisition ofland.

116. General non-discrimination provisions. 11 7. Assignment or transfer oflicence or pennit.

118. Suspension and amendment ofconditions in a licence or permit.

119. Surrender oflicence or permit

120. Grounds for the revocation of a licence or permit.

121. Notice ofdefault prior to revocation.

122. Tariffprinciples.

123. Tariffmethodology. I 24. Approval and publication ofcharging structures. PART IV-ADMINISTRATION OF MIDSTREAM AND DOWNSTREAM GAS OPERATIONS

125. Activities requiring a licence for midstream and downstream gas operations.

126. Special regulations for midstream and downstream gas operations.

127. Rights of way relating to midstream and downstream gas operations. Perroleum lndushy Act, 2021 2021 No. 6 A125

128. Surface rights reserved for the Authority relating to midstream and downstream gas operations.

129. Grant of a gas processing licence.

130. General duties of the holder of a gas processing licence.

131. Conditions applicable to a gas processing licence.

132. Grant of a bulk gas storage licence. l33. General duties of a bulk gas storage licensee.

134. Conditions applicable to a bulk gas storage licence.

135. Grant of gas transportation pipeline licence.

136. General duties of a transportation pipeline owner.

137. Conditions applicable to a gas transportation pipeline licence. 13 &. Grant of gas transportation network operator Ii cence.

139. General duties of a gas transportation network operator.

140. Powers of a transportation network operator. !4 l. Conditions applicable to a gas transportation network operator I icence.

142. Grant of a wholesale gas supply licence.

143. General duties of a wholesale gas supplier.

144. Rights of a wholesale gas supplier.

145. Conditions applicable to a wholesale gas supply licence.

146. Grant of retail gas supply licence. 14 7. General duties of gas retai 1er.

148. Grant of gas distribution licence.

149. General duties of a gas distributor.

150. Rights of the gas distributor. 15 l. Conditions applicable to a gas distribution licence.

152. Arrangements for gas distribution.

153. Domestic gas aggregation licence. ! 54. Functions of the domestic gas aggregator. !55. Establishment of the aggregator. ! 56. Gas purchase orders. l 57. Price conditions of gas pure hase orders.

158. Wholesale customers.

159. Trading and settlement of wholesale gas.

160. Gas network code.

161. Access related to midstream and downstream gas operations.

162. Conditions for the provision of open access in relation to gas operations.

163. Disputes in relation to access:.

164. Customer protection.

165. Provis ion of service to customers.

166. Transfer of customers.

167. Natural gas prices for the strategic sectors and gas distributors. l 68. Gas based industries gas price. A 126 2021 No. 6 Petroleum lndusr,:v Acl, 2021

169. Power to regulate and review prices.

170. Pricing principles in relation to gas.

171. Public service obligations related to policy issues.

172. Public service levy.

173. Domestic gas demand requirement. PART V-ADM!NISTRATION OF MIDSTREAM AND DOWNSTREAM PETROLEUM LIQUIDS OPERATIONS

174. Activities requiring a licence for midstream and downstream petroleum liquids operations.

175. Spee ial regulations for mid stream and down stream petroleum Iiqu ids operations.

176. Rights of way relating to midstream and downstream petroleum liquids operations.

177. Surface rights reserves for the Authority for midstream and downstream petroleum liquids operations.

178. Petroleum Iiquids: midstream network code.

179. Third party access relating to midstream and downstream petroleum liquids operations.

180. Conditions for the provision of open access in relation to petroleum liquids operations. ·

181. National strategic stocks. I 82. Operating stock.

183. Grant of a crude oil refining licence.

184. General duties of a crude oil refiner.

185. Access rights.

186. Conditions applicable to a crude oil refining licence.

187. Grant of a bulk petroleum liquids storage licence.

188. General duties of a bulk storage licensee.

189. Conditions applicable to a bulk petroleum Iiq uids storage licence.

190. Grant of petroleum liquids transportation pipe! ine licence.

191. Gen era! duties of a petroleum Iiqu ids transportation pipe Ii ne owner.

192. Conditions applicable to a petroleum liquids transportation pipeline licence.

193. Grant of a petro Ieum Iiq uids transportation network operator licence.

194. General duties of a petroleum liquids transpm1ation network operator.

195. Powers of a petroleum Iiqu ids transportation network operator.

196. Conditions applicable to a petroleum liquids transportation network operator licence.

197. Grant of a wholesale petroleum liquids supply licence.

198. General duties of a wholesale petroleum liquids supplier.

199. Rights of a wholesale petroleum liquids supplier.

200. Conditions applicable to a wholesale petroleum liquids supply licence. Petroleum Jndus11:v Act, 2021 2021 No. 6 A 127 20 l. Grant of Iicence for distribution of petroleum products.

202. General duties of petroleum product distributor.

203. Grant of a licence to construct and operate a facility for retail supply and distribution of petroleum products.

204. Grant of a licence to construct and operate a facility for the production of petrochemicals.

20S. Pricing regime and power to regulate tariffs.

206. Wholesale prices for petroleum products.

207. Pricing principles in relation to petroleum products.

208. Publication of prices. PART VI-OTHER MAlTERS RELATED TO MmSTREA!\1 AND DOWNSTREAM OPERATIONS

209. Pltblic service obligations.

210. Competition and market regulation.

211. Power to prevent anti-com,petitive behavior.

212. Separation of certain licenced activities.

213. Non-discrimination among customers.

214. Considerations for exercise of the Authority's powers.

215. Power to serve notice, issue "'cease and desisC order. PART VII-COMMON PROVISIONS FOR UPSTREAM, MIDSTREAM AND DOWNSTREAM PETROLEUM OPERATIONS

216. Consultation for regulations.

217. Contravention and enforcement of conditions of leases, licences or pennits where it appears.

218. Mandatory registration.

219. Register of Iicences, perm its and authorisations.

220. Preparation of leases, licences, permits and authorisations. 22 l. Effective date and authentication oflicences, permits and authorisations.

222. Register of memorials and interests.

223. Effect of registration.

224. Public access to the registry.

225. Radioactive materials.

226. Default approvals. 22 7. Disc Iosure of confident iai or other information.

228. Offences.

229. Penalties.

230. Refusal to furnish, return or supply information.

231. Power to issue administrative penalties. 232, Abandonment, decommissioning and disposal. Decommissioning and abandonment fund, A 128 2021 No. 6 Petroleum Indusiry Act, 2021 CHAPTER 3-HOST COMMUNITIES DEVELOPMENT

235. Objectives and regulations.

235. Incorporation of host communities' development trusts.

236. Timeframe for incorporation of host communities development trust. 23 7. Transfer of settler's interest and ob Iigations subject to host communities deve !opment trust obligation.

238. Failure to incorporate host communities development trust.

239. Objectives of host communities development trust.

240. Sources of funding for petroleum host communities development trust. 24 l. Matters on which the funds may be utilised.

242. The Board of Trustees, composition and management.

243. Duties and functions of the Board of Trustees.

244. Allocation of funds.

245. Matrix for distribution of trust fund.

246. Engagement of fund managers.

247. Management committee, composition and powers.

248. Duties and functions of the management committee.

249. Host communities advisory committee and composition.

250. Duties and functions of the host communities advisory committee.

251. Host communities needs assessment.

252. Host communities development plan.

253. Financial year of the host communities developmei1t trust.

254. Accounts and audit.

255. Mid-year and annual reports.

256. Exemption from income tax.

257. Deduction of payment for petroleum host community development. CHAPTER 4-----PETROLEUM INDUSTRY FISCAL FRAMEWORK PART l----0BJECTIVES AND ADMINISTRATION

258. Objectives.

259. Administration. PART II-HYDROCARBON TAX

260. Application of this Part.

261. Charge cif hydrocarbon tax.

262. Ascertainment of crude oil revenue. adjusted profit, assessable profits and chargeable profits.

263. Allowable deductions.

264. Deductions not allowed.

265. Assessable profits and losses.

266. Chargeable profits and allowances. Petroleum Indust;y Ac/, 2021 2021 No. 6 A 129 PART ffi-ASCERTA!NMEITT OF CHARGEABLE TAX

267. Chargeable tax.

268. Additional chargeable tax payable in certain circumstances. PART IV-ASCERTAINMENT OF CHARGEABLE PROFITS AND CONSOLIDATION FOR TAX PURPOSES

269. Artificial transactions.

270. Pre-production cost.

271. Trade or business sold or transferred.

272. Consolidation of costs and taxes. PART V-PERSONS CHARGEABLE

273. Partnerships.

274. Company wound up.

275. Avoidance by transfer.

276. Indemnification ofrepresentative. PART Vl-APPLICAB!UTY, Accm.:NTS AND PARTICULARS

277. Preparation and delivery of accounts and particulars.

278. Power of the service to request further information.

279. Power to call for returns and books.

280. Returns of estimated tax. 28 l. Extension of periods for making returns.

282. Assessment of ta,x payable.

283. Additional assessments.

284. Making of assessments.

285. Notices of assessment.

286. Errors and defects in assessment and notice. 28 7. Tax computation. PART VII-APPEALS

288. Appeals to TaxAppeal Tribunal.

289. Assessment to be final and conclusive. PART VllI----CoLLECTION, RECOVERY AND REPAYMENT Of TAX

290. Procedure in cases \.vbere objection or appeal is pending.

291. Time within which payment is to be made.

292. Penalty for non-payment of tax and enforcement of payment.

293. Co Uection of tax after determination of objection or appeal.

294. Su it for tax by the service.

295. Relief in respect of error or mistake. A 130 2021 No. 6 Petroleum Indus11y Act, 202 l

296. Repayment of tax. PART 1X----0FFENCES AND PENALTIES

297. Penalty for defaults.

298. Penalty for making incorrect accounts.

299. False statements and returns.

300. Penalties for offem:t:s by authorised or unauthorised persons.

301. Tax to be payable notwithstanding any proceedings for penalties. PART X-APPLJCATION Of COMPANIES INCOME TAX TO PETROLEUM OPERATIONS

302. General requirement of companies engaged in petroleum operations to pay companies income tax. PART XI-GENERAL PROVISIONS

303. General application of this Part and other matters.

304. Regulations, rules and forms.

305. Fiscal stabilisation.

306. Royalty. CHAPTER 5-MISCELLANEOUS PROVISIONS

307. Legal proceedings.

308. Pre-action notice.

309. Consequential amendments.

310. Repeals.

311. Saving provisions.

312. Transfer of assets and liability to the Commission. 3 13. Transfer of assets and l iab iIity to the Authority.

314. Transfer of employees and conditions of service.

315. Movement of staff of the institutions. 3 I 6. Transfer of exist i1i g host com 111 unities deve Iop 111 en t projects and host communities development schemes.

317. Transitional and savings provisions.

318. Interpretation.

319. Citation. SCl-:IEDULES Al31 PETROLEUM INDUSTRY ACT, 2021 ACT No. 6 AN ACT TO PROVIDE LEGAL, GOVERNANCE, REGULATORY AND f!SCAL fRAME\\'ORK FOR THF. NIGERIAN PETROLEUM INDUSTRY, THE DEVELOPMENT OF HOST COMlv1UN1TIES ; AND FOR RELATED MATTERS [16th Day of August, 202 l] Co111mence- ment. ENACTED by the Natio1ial Assembly of the Federal Republic of Nigeria~ CHAPTER !-GOVERNANCE AND INSTITUTIONS PART }-OBJECTIVES AND APPL!CAT!ON

1. The property and ownership of petroleum within Nigeria and its Vesting of territorial waters, continental shelf and exclusive economic zone is vested in petroleum. the Government of the Federation ofNigeria.

2. The objectives of this Chapter are to-- Objectin:s. (a) create efficient and effective governing institutions, with clear and separate roles for the petroleum industry; (b) establish a framework for the creation ofa commercially oriented and profit-driven national petroleum company; (c) promote Lransparency, good governance and accountability in the administration of the petroleum resources ofNigeria; (d) foster a business environment conducive for petroleum operations; and (e) deepen local content practice in Nigeria oil and gas industry. PART li-MIN!STCR OF PETROLEUM

3. (I )-----The Minister sha\1- Powers or the (a) formulate, monitor and administer government policy in the petroleum Minister. industry; (b) exercise general supervision over the affairs and operations of the petroleum industry in accordance \Vith the provisions of this Act; (c) report developments in the petroleum industry to the government; (d) represent Nigeria at international organisations on petroleum matters; (e) promote an enabling environment for investment in the Nigerinn petroleum industry; (/) negotiate treaties or other international agreements on matters pertaining to petroleum on behalf of the Government; A 132 2021 No. 6 Petroleum Industry Act, 2021 (g) upon the recommendation of the Commission, grant petroleum prospecting licences and petroleum mining leases through the processes established in this Act; (/,) upon the recommendation of the Commission and pursuant to the provisions of this Act and the regulations, revoke and assign interests in petroleum prospecting licences and petroleum mining leases; (i) delegate in writing to the Chief Executive of the Commission or Authority any power conferred on the Minister by or under this-Act; (i) upon the recommendation of the Commission or Authority approve the fees for services rendered by the Commission or Authority in regulations; and (k) upon the recommendation of the Commission or the Authority, direct in writing the suspension of petroleum operations in any area- (i) unti I arrangements to prevent danger to I ife or property have been made to his satisfaction, or (ii)where in his opinion, a contravention ofthisAct or any regulation made under this Act has occurred or is likely to occur. (2) The Minister may order a cutback of the levels of crude oil or condensate production in the context of international oil pricing agreements supported by Nigeria. First (3) The Minister shall have rights of pre-emption of petroleum and Schedule. petroleum products marketed under any licence or lease in the event of a national emergency under the First Schedule to this Act. (4) The Minister sha 11 give general po! icy directives to the Commission on matters concerning upstream petroleum operations and to the Authorir; on matters relating to midstream and downstream petroleum operations as well as matters related to co-operation among the two entities in line with the provisions of this Act and the Commission and the Authority shall comply with such directives. (5) The Minister shall cause the general policy directives issued under subsection (4) to be published in the Federal Government Gazel!e. PART Ill-THE COMMISSION Establishment 4.----{ I) There is established the Nigerian Upstream Petro \cum Regulatory of the Commission (in this Act referred to as "the Commission") which shall be a Nigerian body corporate with perpetual succession and a common seal. Upstream Petroleum (2) The Commission shal I have the power to acquire, ho Id and dis pose of Regulatory property, sue and be sued in its own name. Commission. Petroleum Industry Act, 2021 2021 No. 6 Al33 (3) The Commission shal ! be responsible for the technical and commerc ia [ regulation of upstream petroleum operations.

5. The objects and functions cfthe Commission in this Part are limited Application to upstream petroleum operations. of 1h is Part.

6. The objectives of the Commission shall be tc------ Objccthcs of the (a) regulate upstream petroleum operations including technical, operational Commission. and commercial activities; (b) ensure compliance with all applicable laws and regulations governing upstream petroleum operations; (c) ensure that upstream petroleum operations are carried out in a manner to minimise waste and achieve optimal government revenues; (d) promote healthy, safe, efficient and effective conduct of upstream petroleum operations in an environmentally acceptable and sustainable manner; (e) ensure efficient, safe, effective and sustainable infrastructural development of upstream petroleum operations; (f) detennine, adm in istcr and ensure the implementation and maintenance of technical standards, codes, practices and specifications applicable to upstream petroleum operations pursuant to good international petroleum industry practices; (g) implement government policies for upstream petroleum operations as directed by the Minister of Petroleum in accordance with the provisions of this Act; (h) promote an enabling environment for investment in upstream petroleum operations ; (;) ensure strict implementation of environmental policies, laws and regulations for upstream petroleum operations; (i) ensure the implementation ofnationa! policies for upstream petroleum operations ; and (k) implement such other policies and objectives as are consistent with the provisions of this Act.

7. The technical regulatory functions of the Commission include to------ Tcclmicul regulatory (a) enforce, administer and implement laws, regulations and policies functions of relating to upstream petroleum operations; the (b) ensure compliance with applicable national and international Commission. petroleum industry policies, standards and practices for upstream petroleum operations; A 134 2021 No. 6 Petroleum Industry Act, 2021 ( c) est a b I ish, monitor, regu I ate and en force h ea Ith, safety and environmental measures and standards relating to upstream petroleum operations including- (i) management of petroleum reserves and installations, and ( ii) exploration. development and production activities within the onshore, frontier, shallow water and deep offshore acreages ofNigeria; (d) administer, monitor and enforce compliance with the terms and conditions ofleases and licences grantr:d and permits and authorisations issued to a company in respect of upstream petroleum operations ; (e) set, define and enforce approved standards and 1·egulations for design, construction, fabrication, operation and maintenance of plants, installations and facilities used orto be used in upstream petroleum operations including- (i) crude oil and natural gas evaluation and management, (ii) upstream natural gas gathering, (iii) natural gas treatment, and (iv) the elimination of natura I gas flaring and venting; (f) keep public registers of- (i) Iicences and leases granted by the Minister and permits and other authorisations issued by the Commission, (ii) beneficial ownership, and (iii) award, renewal, assignment, amendment, suspension and revocation; (g) carry out enquiries, tests, audits or investigations and take other steps to monitor the activities oflicensees, lessees or permit holders; (h) establish and enforce standards relating to upstream petroleum operations; (i) undertake evaluation of national reserves and develop policies for prudent reservoir management practices ; U) maintain a Nigerian petroleum industry data bank comprising of materials, information and data acquired by, or submitted to, the Commission in the exere ise of its statutory and regulatory fo net ions ; (k) require lessees, licensees and permit holders to furnish and publish specified information relating to upstream petroleum operations in this Act and the National Data Repository Regulation, 2020; (I) supervise and ensure accurate calibration and certification of equipment used for metering upstream petroleum operations, pursuant to applicable laws, and issue certi fie ates of q un 1ity and quantity for petroleum produced; Petroleum Industry Act, 202 l 2021 No. 6 A 135 (111) publish reports and statistics on upstream petroleum operations to promote the grow1h of the petroleum industry; (n) advise the Minister on fiscal, operational, technical and other matters to enhance the upstream petroleum operations ; (o) issue permits and other authorisations as may be nt:cessury under an upstream licence or lease, including- (i) seismic operations, (ii) drilling operations, and (iii) design, construction and operation of facilities for upstream petroleum operations; (p) establish special laboratories to provide data storage and testing, quality assurance and certification for upstream petroleum operations; (q) perform technical evaluation and assessments regarding submissions made to the Commission by licensees, lessees or permit holders involved in upstream petroleum operations; (r) keep records, data and reports obtained from upstream petroleum operations, as may be required under any Act or regulation and give directive to any person, company or entity in that regard : (s) manage and administer data regarding unallocated acreage; (t) conduct bidding rounds fort he award of petroleum prospecting licences and petroleum mining !eases pursuant to this act and applicable regulations ; (11) when requested, provide assistance to parties conducting upstream petroleum operation, where in the sole opinion of the Commission such assistance is merited ; (v) approve fie!d development plans for upstream petroleum operations as well as monitor its execution ; (w) compute, determine, assess and ensure payment of royalties, rents, fees, and other charges for upstream petroleum operations as stipulated under this Act and any regulation ; (x) establish parameters and codes of conduct for licensees, lessees or permit holders in the upstream petroleum operations ; (v) monitor the financial viability of! icensees, lessees or permit holders with respect to upstream petroleum operations ; (z) develop, maintain and publish a database of upstream petroleum operations ; (aa) subject to the confidentiality provisions of section 83 (7) of this Act, share information and data on the upstream petroleum operations with other government entities which have functions \Vith respect to the petroleum sector; A 136 2021 No. 6 Petmleum l11dus11y Act, 2021 (bb) perform such other function as may be necessary to give effect to the provisions of this Act. (cc) ensure and monitor performance of industry players and quality of the pro vis ion of services of servicing companies in the upstream pd role um industry; (dd) conduct studies reiating to thr.: i.:conomy, efficiency and effectiveness of the upstream petroleum industry; and (ee) issue certificates of quality and quantity to exporters of crude oil, natural gas and petroleum products from integrated operations and crude oil export terminals established prior to the effective date and the Commission shall have the power to monitor and regulate the operations of crnde oi! export terminals and the responsibility of weights and measures at the crude oil export terminals shall cease to exist from the effective date. Commercial 8. The commerc ia 1 regulatory foncti ons of the Commission sha 11 regulatory beto~ functions of the (a) review and approve the commercial aspects of field development Commission. plans in the upstream petroleum operations; (b) develop cost studies and benchmarks forthe evaluation of upstream petroleum operations taking into account petroleum industry specific issues, including field size, reservoir depth, location ofoperations, technology applied, production methods and petroleum quality; (c) a!!ocate petroleum production quotas for the purpose of curtailing export of petroleum in conjunction with NNPC Limited pursuant to regulations; and (d) where in situ facilities or fixed or floating platforms or vessels provide for fully integrated upstream and midstream petroleum opcrntions, the Commission shall consider and the Commission shall be in charge of such integrated operations and petroleum operations may be considered inlegrated where there is a joint use of utilities used exclusively for the upstream and midstream operations. Functions of 9.-{ I) The functions of the Commission with respect to frontier basins the shall be to-- Commission for frontier (a) promote the exploration of the frontier basins of Nigeria: basins. (b) develop exploration strategies and portfolio management for the exploration ofunassigned frontier acreages in Nigeria; (c) identify opportunities and increase in format ion about the petro !e urn resources base within frontier basins in Nigeria; and (d) undertake studies, analyse and evaluate unassigned frontier basins in Nigeria. Petroleum IndustJy Act, 20:21 2021 No. 6 A 137 (2) Where data acquired and interpreted under a petro !eu m exp !oration Iicence, in the judgment of the Commission, require testing and drilling of identifiable prospects and leads, and no commercial entity has publicly expressed an intention of testing or drilling such prospects, the Commission shall, in line with section 64 (k) of this Act, request the services of NNPC Limited to drill or test such prospect and leads on a service fee basis to be charged to the Frontier Exploration Fund under this Act. (3) Where commercial discovery is made under subsection (2), NNPC limited shall have the first right of refusal in the award of the acreage for subsequent development and other petroleum operations in such frontier acreages under this Act. (4) There shall be maintained, for the purpose of this section, a Frontier Exploration Fund which shall be 30% ofNNPC Limited's profit oil and profit gas as in the production sharing, profit sharing and risk service contracts. (5) NNPC Limited sha!l transfer the 30% of profit oil and profit gas under subsection (4) to the Frontier Exploration Fund escrow account dedicated for the development of frontier acreages nnd utilise the funds to carry out exploration and development activities in the frontier acreages subject to appropriation by the National Assembly.

10. The Commission shall have power to-- PO\\ers of the {a) enforce the provisions of m1y- Commission. (I) regu !ati011 made with respect to upstream petroleum operations, (ii) regulations, policies or guidelines formerly administered by the Department of Petroleum Re sou re es or the Petro Ieu m lnspec torate, with respect to upstream petroleum operations, and ( iii) enactments with respe et tot he upstream p etro le urn industry made prior to the coming into force of this Act and any regulations made pursuant to powers given un der them : (b) seal up any premises, under section 217 of this Act, including any facility or plant engaged in upstream petroleum operations, where there has been a contravention of this Act or any regulations made under this Act ; ( c) ensure comp! ianc e with the N uc !ear Safety and Radiation Protection Cnp N 142. Act and such other legislative provisions as may be applicable in upstream LFN. 2004. petroleum operations; (d) set standards to promote the adoption of new technologies for upstream petroleum operations; (e) require lessees, licensees and permit holders to publish specified and non~proprietary information re \ating to upstream petroleum operations; A 138 2021 No. 6 Pelroleum I11dus1ry Act, 2021 (/) issue guidelines in accordance with the provisions of this Act or any regulation in respect of upstream petro Ieu m operations; (g) recommend to the Minister the revocation or suspension of licences or leases in accordance with this Act and approve renewal of leases; (h) with in the jurisdiction of the Commission, have access to- (i) areas or rights of way regarding licences, leases or any related offices or bu iId ings where information or data are a vai lab le for inspection under this Act; and {ii) all installations to which this Act app Iies, including plants and stations of every description, for the purpose of inspecting the operations conducted therein and enforcing the provisions of this Act and any regulations made under it; (i) impose on a petroieum prospecting licence, petroleum exploration licence or any petroleum mining lease to which this Act applies, special terms and conditions consistent with this Act at the grant or renewal of the licence or lease ; (i) renew licenses and leases st1bjectto the provisions of this Act; and (k) do such other things as are necessary and expedient for the effective and discharge of any of its functions under this Act. Go\'eming 11.-( l) There is established a Governing Board (in this Act referred to Board of the as "the Board of the Commission") which shall be responsible for the policy Commission. and general administration of the Commission. (2) The Board of the Commission shall consist of- (a) one non-executive chairman; (b) two non-executive commissioners; (c) the chief executive of the Commission (in this Act referred to as "the Commission Chief Executive"') ; (d) nvo other executive commissioners who are responsible for finance and accounts and exploration and acreage management; (e) one representative of the Authority nor belov,· the rank of Director; (f) one representative of the Ministry not belO\v the rank of Director ; and (g) one representative of the Ministry of Finance not below the rank of Director. (3) Appointments to the Board of the Commission under subsection (2) shall be made by the President subject to confirmation by the Senate, except for the appointments of ex-officio members under subsection (2) (e), (l) and (g), Petroleum Ind11st1:v Act, 2021 2021 No. 6 A 139 (4) A person appointed under subsection (2) (a) and (b) shall have at !east 15 years post-qua Iification cognate experience in petroleum or other relevant sector of the economy and shall hold office for a period of five years and may be re-appointed for a further term of five yei1rs, u11 such terms and conditions as may be specified in the letter of appointment. (5) Subject to subsection (4) of this section and section I 8 (7) of this Act, a commissioner shal I hold office for five years and may be re-appointed for a fm1her term of five years. (6) A non-executive co.mmissioner shall hold office on part-time basis. (7) The Board of the Commission may authorise in writing any commissioner, committee of the Board of the Commission, the Commission Chief Executive or any other officer or employee of the Corn mission, to exere ise any power or carry out any duty or function of the Commission under this Act or regulation made under this Act. (8) The proceedings of the Board of the Commission and other ancillary matters shall be as prescribed by regulation made under this Act.

12. The Board of the Commission sha!l- Fum:cions of 1hc Go~rd (a) be responsible for the formulation of policy, supervision and giving of the strategic direction to the Commission; Commission. (b) provide genera! guidance for the carrying out of the functions of tl1e Commission; (c) review and approve the business, strntegic and operating plans of the Commission; (d) consider and apprnve the annual budget of the Commission before submission to the National Assembly for appropriation ; (e) approve the management accounts and audited accounts of the Commission and consider the management !etter from the external auditors; (f) determine the terms and corid it ions of service of employees of the Commission; (g) recommend remuneration, allowances, benefits and pensions of employees of the Commission in consu !tat ion \Vith the National Salaries, Incomes and Wages Commission, having regard to the- (i) specialised nature of work to be performed by the Com miss ion, (ii) need to ensure the financial self-sufficiency of the Commission, and (iii) remuneration and a!lowances paid in the private sector in upstream petroleum operations \0 individuals with equivalent responsibilities, expertise and skills; A 140 2021 No. 6 PeJro/eum Industry Act, 202 l (h) structure the Commission into such number of departments as it deems fit for the effective performance of the fun et ions of the Commission; and (i) perfonn such other functions as may be necessary for the efficient and effective administration of the Commission under this Act. Remuneration 13.-{ I) Commissioners shall be paid from the funds of the Commission and su eh rem ll nera ti on and al lowances as a ppi iea b!e. al lo,,anccs of the Board (2) The Commission shall comply with the policy and guidelines of the of the National Sa 1aries, Incomes and Wages Com 111 iss ion regarding rem u ne rations. Commission. Suspension 14. A member of the Board of the Commission may be suspended or orremo\a! removed from office by the President, where the member- of members of the· Board (a) is found to be---- of the (i) unqualified for appointment under section 11 of this Act, Commission. (ii) unqualified subsequent to his appointment, or AetNo 3. (iii) in breach of conflict of interest provisions in the Companies and

2020. Allied Matters Act or any regulation regarding coriflicts of interest passed under this Act; (b) ceases to be an employee of the ministry or agency he represents on the Board of the Commission; (c) has demonstrated an inability to effectively discharge the duties of his office; (d) has been absent from the meeting of the Board of the Commission for three consecutive times without the consent of the Chairman or in the case of the Chairman, without the consent of the President, except where good reason is shmvn for the absence ; (e) is found guilty of serious misconduct by acowiortribunal of competent jurisdiction; or (f) has, under the law in force in any country- (i} been adjudged or dee lared bankrupt or insolvent and has not been discharged, (ii) made an assignment to or arrangement or composition with his creditors which has not been rescinded or set aside, or (iii) been declared to be of unsound mind. Resignation 15. A non-executive commissioner may resign his appointment by giving ora non- two.man th 's written notice to the Pres id en t. exccuthe commissioner. Petroleum Industry Act, 2021 2021 No. 6 A 141

16. A vacancy on the Board of the Commission shall occur, where a Vacancy on commissioner- the Bo;mJ or !he (a) dies ; Commission. (b) is removed from office in accordance \vith section 14 of this Act; (c) resigns from office ; (d) completes his tenure of office ; or (e) is incapacitated.

17. A vacancy on the Board of the Comm iss io 11 sha!! be filled by the Filling of appointment of another person in accordance with section 11 of this Act. \ncancy on th1: l3oarJ of the Commisslon.

18.-(1) The Commission Chcef Executive is the accounting officer Commission and shall be responsible for the administration of the Commission. Chief E:,:ecutin: (2) There shall be six executive commissioners for the Commission and with each responsible for one of the fol!owing- E:-:,.:cu1i1c Commi.."'ien1.~s. (a) Exploration and Acreage Management; (b) Development and Production ; (c) Health, Safety, Environment and Community; (d) Economic Regulation and Strategic Planning; (e) Corporate Services and Administration ; and (/") Finance and Accounts. (3) A person to be appointed as Commission Chief Executive and as an executive commissioner of the Commission shall have extensive managerial, technical or professional knO\vledge of the upstream petroleum operations with a minimum of 15 years post¥qual ification cognate experience. (4) The Commission Chief Executive shall be appointee! on such terms and conditions as may be set m1t in the letter of appointment, except as otherwise provided for in this Act. (5) An Executive Commissioner shall be appointed on such terms and conditions as n1ay be set out in the letter of appointment, except as otherwise provided for in this Act. ( 6) The Commission Chief Executive sh al I be a ppo in ted for an in itia! term of five years and may be re¥appointed for a further term of five years, subject to confirmation by the Senate. A 142 2021 No. 6 Petroleum Indus/JJ' Ac:t, 2021 (7) The President may, not later than 90 days prior to the expi1·ntion of the tenure of the Commission Chief Executive or an cxcct1tive commissioner, re-appoint the Commission Chief Executive or Executive Commissioner or appoint another qua Ii fi ed per~o n. (8) A person shall not be appointed as a Commission Chief Executive or an Executive Commissioner, where lht: person- Act No 3. (a) is Iike ly to be in breach of con n ict of interest provisions under the

2020. Companies and Allied Matters Act or regulation made ll!H.kr this Act: (b) has a financial interest in any business connected, directly or indirectly with the petroleum industry; (c) is engaged in any activity for remuneration or otherwise connected with the petroleum industry ; (cl) is a relative of a person who has an interest or is engaged in any of the activities under paragraphs (a)-(c). provided that- (i) such person may be appointed Commission Chief Executive or an Executive Commissioner if he dee Iarcs his interest and mnkes npproprialc arrangements to ensure the avo ida nee of a con met of interest, (ii) the President is satisfied that the interest or activity shall not interfere with the person's impartial discharge of his duties as the Commission Chief Executive or an executive commissioner, or (iii) the financinl interest is terminated prior to the appointment Inking effect; or (e) has, under the laws in force in any country- (i) been adjudged or declared bankrupt or insolvent and hns not been \ discharged, (ii) made an assignment Lo, or arrangement or composition with his creditors, which has not been rescinded or set aside, (iii) been declared to be of unsound mind, (il') been convicted of any criminal ollence by a cou11 ofcornpet~nt jurisdiction except for traffic offences, or (v) been disqualified or suspended from prnctisi11g his profession by the order of a competent authority. Employees 19. The Board of the Commission shal I determine the number or persons orthe that shall be employees of the Commission. Commission. Petroleum Industry Act, 2021 2021 No. 6 A 143 20.--{1) The employees of the Commission shall be subject to terms Terms and and conditions of service set out by the Board of the Commission. conditions or s..:n ice in the (2) The terms and conditions of service referred to in subsection ( l} Cummissiun. may provide for- (a) the appointment, promotion, d ism issa I ai1d disc ip Ii ne o t·employees ; (b) appeals by employees against dismissal or other disciplinary measures; and (c) the grant of pensions, gratuities and other retirement benefits to employees. (3) In this section, "cppoinlment" includes secondment, transfer and contract appointments. (4) Employees of the Commission shal I be "public officers" as defined C:ip. C:23. in the Constitution of the Federal Republic ofN igeria. LFN. 200·-L {S) Employment by the Commission shall be subject to the provisions of A<:t No--1. the Pension Reform Act and officers and employees of the Com miss ion sha 11 201·1. be entitled to pension and other retirement benefits as prescribed under the Pensions Reform Act. (6) Nothing in subsection (S) shall prevent the Commission from appointing a person to an office on terms that preclude the grant of pension or other retirement benefits in respect of that office.

21. The Board of the Commission, in consultation with the National Rt.:rntuicmtion Salaries, Incomes and Wages Commission, shall determine and periodically anJ n!lO\\flllC<!.<; reviev. the remuneration and aHowances payable to the employees of the or Commission, having regard Lo the- cmplo::..:i.:s (a) specialised nature of work to be performed by the employees of the 0!'1!11: Commission. Commission; ( b) need to ensure the fi nanda I se I f-s ufficie ncy of the Com 111 issi on ; and {c) remuneration and allowances paid within the petroleum industry to individuals \Yith eq uiva !en t responsibilities, experti sc and ski 11 s. 22.--{l) The Commission shall, not later than 30th of September of ~1,1kll1Cl11 or each year or such other date that the Minister responsible for Budget and c,timat..:d National Planning may determine, prepare and present to the National inc,1m.: ,ind c.,p,:nJi Lun:- Assembly, a statement of estimated income and expenditure of the Comniissi,m n t' the for the next financial year. C,·.nimission. i2) Notwithstmdin g the provisions of this section, the Commission rnay, 11, , ,~h financial yenr, submit to the Natiomd Assembly, supp!ernent"ry or ,._:d statements of estimated i11co111e and e\penditure t)fthc Com1r,i,,:,k,11 A 144 2021 No. 6 Petroleum Indust,}' Act, 2021 (3) The financial year of the Commission slm 11 be a period or 12 ea !cntlar months commencing on the I st of January in each year or such other dntc as the Minister of Finance may deterrn in e. Secretary to 23.-( ! ) The Board of the Commission shnl 1 appoint a Secretary, the ,.vho :;ha 11 - Commission. (a) be the Legal Adviser to the Commission : (b) attend meetings of the Board of the Commission and keep minutes, corporate records and the common seal of the Commission; and (c) carry out such administrative and other secretarial duties ns the Commission Chief Executive and the Board of the Commission may direct. (2) The Secretary sha 1l be a legn I practitioner with a rnin imurn or l 0 years post-qualification ex.perience. rund of the 24.-( ! ) The Commission shall maintain a Fund (in this Act reforred to Commission. as ''the Commission Fund") into which money accruing to the Commission shall be paid nncl all expenditures of the commission shall be subjee! to appropriation by the National Assembly. (2) The source of the Commission Fund shall be as follows- (a) money appropriated by the National Assembly for the Corn mission: ( b) fees charged by the Commission for services rend crcd to licensees, lessees, permit holders and other authorisations issued by the Commission; (c) cost of collection by the Commission; (d) income derived from publications made by the Commission and other related activities, including data sn les; (e) fees paid to the Commission for using facilities owned or managed by the Commission; and (f) money accruing to the Commission by way of grants, aids, gifts, testamentary di spos it ions, endowments and contributions, (3) The Commission Fund shal! be applied- (a) to meet approved budgetary obligations of the Commission; (b) to meet administrative nnd operating cost of the Commission ; (c) to pay salaries, wages, fees or other remuneration or allowances, pensions and other retirement benefits payable to employees of the Commission; (d) to acquire and maintain any property acquired by or vested in the Commission; Petroleum ludushy Act, 2021 2021 No. 6 A 145 (e) for investments, as provided tmder the Trustee Investments Act or Cnp. T22 any other applicable legislation, subject to the approvn I of Minister responsible I.FN. 200-l. for Finance; and (n in connection with any of the functions of the Commission under this Act. (4) The Commission shall ensure that money accruing from royalties and rents charged undc r this A et or any subsidiary legi s Iat ion rn ade tmd er this Act on royalties and rents are paid into the Federation Account. (S) At the end of each financial year, any money that accrued to the Commission Fund under subsection (2), which have not been utilised for the purposes provided under subsection (3), shall be paid into the Consolidated Revenue Fund. ( 6) The Commission may accept grants of money or property on such tem1s and conditions as may be specified by the person or organisation making the grant, provided that- (a) the tenns and conditions of the grant are consistent \.Vi t h the objectives and functions of the Commission; or ( b) no such grant is a ccep te d fro 111 any person or organisation reg u !ated by the Commission. (7) Nothing in subsection (6) or under this Act shall be construed as authorising the Commission Chief Executive. commissioners, officer or employee of the Commission to accept any grant for their personal use. (8) The Commission shall keep proper accounts of its income and expenditure for each financial year and cause it to be audited within six months after the end of each financial year by auditors appointed by the Commission from a list of auditors approved in accordance with guidelines, supplied by the Audi tor-General for the Fede ration. (9) The Commission shal I submit to the Ministcr- (a) a mid-year report of its operations and finances not later than the 31 st of August of each year ; (b) an annual report of its operations and performance; and (c) an audited financial account for the year, not later than 31 st of March of the following year. ( I 0) The Commission shall, not later than the 31 st of March of each year- (o) submit to the tvlinlster n sumrnary of its annual report and audited financial accounts : and A 146 2021 No. 6 Petroleum Industry Ac!, 2021 ( b) publish the annual report and aud itee! financ ia1accounts on its website. ( 11) The provisions of any enactment relating to the taxation of companies or trust funds shall not apply to the Commission. Notice to the 25.-(1) Any Government ministry. department or agency exercising Commission. any power or function or taking any action, which may have direct impact on upstream petroleum operations shall consult with the Commission prior to- ( a) issuing any regulation, guideline, enforcement order or directive: (b) exercising any such po,ver or function ; or (c) taking any such action. (2) The Commission shall review the recommendations of the Government ministry, department or agency and communicate decision accordingly and such decision shall be complied with by the relevant Government ministry, depai1ment or agency. Special 26.-( l} The Commission shall in performing its functions under this pO\\ers of Act have special powers to- the Commission. (a) inquire, inspect, examine or invcst igate any business or activity re lat i11 g to upstream petroleum operations tmder this Act, where it believes that illegal upstream petroleum operations are going on; (b} conduct surveillance on crude oil and natunil gas installations, premises and vessels where it believes that illegal upstream petroleum operations are going on; (c) enter any upstream wellsite, plant, facility or place- (i} at which crude oil or natural gas is produced, handled or treated, or ( h) that is used in connect ion with nny up stream we IIsite. p Iant. foe iIi ty or place where crude o i I or n a tu ra I gas is produced, hand Ied or 1rea ted : (d) enter at any reasonable time premises containing any records or property required to be maintained under this Act or related to the administration of upstream petroleum operations under this Act for the purpose ofinspecting those records or that property; ( e) require any person or his agent, representative, partner, director, o fficcr or employee engaged in upstream petroleum operations to- (i) answer any question that may be relevallt to the inquiry, inspection, examination or investigation, and ( ii} provide any required in format ion contained in a computer hardware or software or any other data storage, processing or retrieval device or system used in connection with the business or activities relating to upstream petroleum operations under this Act; Petroleum Indus/Jy Ac!, 2021 2021 No. 6 A 147 (f) take any sample or carry out any test or examination as it may consider necessary in the performance ofits runctions: (g) use any machinery, equipment, appliance or thing as it may consider necessary in the performance of its functions; (h) remove for examination and copy anything thal may be relevant lo the inquiry, inspection, examination or investigation. including removing any computer hardware or softwnre or uny other da!a storage, processing or retrieval device or system, during which copyright and trade secrets shall be properly protected ; (i) in conjunction with the Nigeria Polic<.: or other law enforcement agencies, arrest with a warrant, any person rcnsonably bcli~ved to have committed an offence under this Act; and (i) exercise any other power that may be con forred on it under any !a\\ or regulation. (2) An entity. person or agent, representative, partner, director. officer or employee of that entity or person under investigation by the Commission shall~ (a) grant access to officers of the Commission with regard to any place, wellsite, plant, fac i [ity, upstream machinery, equipment, appliances or things that may be relevant to the investigation : and (b) provide on request, any book, account, record, document, voucher. information and explanation relating to upstream petroleum operations as the officers of the Commission may require. (3) An entity, person or agent, representative. partner, director, officer or employee of that entity or person who fails to comply with subsection (2) commits an offence ahd is Ii able on conviction to-- (a) a minimum fine of N5,000,000 or u term of five years imprisonment; and (b) in the case of a continuous offence. to an additionnl minimum fine of N 100,000 for each day during which the offence continues. (4) The Commission sha !I in the exercise of its powers under this section avoid undue hindrance of entities and persons engaged in lawful upstream petroleum operations. (5) The Commission can seal or close any premises or facility utilised for purpose of upstream petroleum operations if the licensee, lessee or permit holder is found to be in breach of the relevant provisions of this Act. A 148 2021 No. 6 Petroleum Jnduslry Act. 2021 Special 27. The special powers of the Commission under section 26 of this lnw:slig:ition Act shall be perfonncd by the Special lnvL-stigation Unit of the Commission Unit. or any person authorised by the Commission. Indemnity of 28.-{I) The Commission Chief Executive. a commissioner or ,my oft"icasof officer ofthe Commission shall each be indenmi lied out of the Commission the Fund against any Iiability incurred in de fending any proceeding aga ins1 the Commission. Commission or brought against him in his offici,11 capacity. (2) Notwithstandirlg the provisions of subsection ( J ). the Commission shall not indemnify the Commission Chicf E.xccuti\ e, a commissioner or any 1 officer of the Commission for any liability incurred as a result of wifful misconduct or gross negligence. PARS IV-Tnc AtiTHORITY Esll!blNim:tu: 29.-{ I) Thcf"e is established the Nigerian M idstrcam and ofthc Downstream Petroleum Regulatory Authority (in this Act referred tons Nigerian ..the Authority""'). which shall be a body corporate with perpetual Midsl.n.'2m mid succession and a common seal. Do,.,.llstn:am (2) The Authority shall have the pmver to acquire, hold and dispose of Petroleum Re-,gu.1310~ property. sue and be sued in its own name. Authority. (3) The Authority shall be responsible for the teclmicaJ and commercial regulation of midstream and downstream petroleum operations in the petroleum industry. Appiicaii.:m 30. The objects and functions ofthe Authority in this Part arc limited ofthls Pan. to midstream and dm..-nstream petroleum operations in the petroleum industry. Objecti\es 31. The objectives of the Authority shall be to- !Jfthe Authority. («) regulate midsiream and dO\:vnstrcam petroleum operations, including technical, operational,. and commercial activities ; (b) ensure efficient, safe, effective and sustainable infrastructural development of midstream and do\"n~1ream petroleum operutions ; {c) promote healthy. safe, efficient and ern. .-ctive conduct of midstream and do'-Vnstream petroleum operations in an environmentally acceptable and sus"aainabte manner : (d) promote a competitive market for n1idstrcam and downstream petroleum operations; {e) promote the supply end distribution of natural gas and petroleum products in midstream and do,.,.,nstream petroleum operations and the security of natural gas supply for the domestic gas market: Petroleum 111dus1ry Act, 2021 2021 No. 6 A 1-49 (f) ensure compliance with applicable lmvs and regufations goveming midstream and downstream petroleum opemtions: (g) ensure crude oil supply for domestic refineries; (h) detennine, ndminister and cnsureilie implem~ntation and maintenance of technical standards, codes., practices and specifications applicable to midstream and downstream petroleum opcrntions pursuant to good international petroleum industry practices; (i) implement Government policies for midstream and dO\vnstream petroleum operations as directed by the Minister and in accordance ,vilh this Act; (i) promote, establish and develop a positive environment for international and domestic investment in midstream and dmvnstream petroleum operations; (k) ensure strict implementation of environmental policies, laws and regulations for midstream and downstream petroleum operations; (/) develop and enforce a framework on tariff and pricing for natural gas and petroleum products; and (m) implement such other policies and objectives as nre consistent with the provisions of this Act.

32. The functions of the Authority shall be to~ Function:s lif 1hc (a) regulate and monitor technical and commercial midstream and ;\u!hori1y. downstream petroleum operations in Nigeria; (h) regulate commercial mids1ream and downstream petroleum operations, including- ( i) petroleum Iiqui ds operations., (ii) domestic naturnl gas operations, and (iii) export natural gas operations; (c) determine appropriate tariff methodology. including for~ (i) processing of natural gas, ( ii) transportation and transmission of natural gns, (iii) transportation of crude oi !, and (iv) bulk storage of crude oil and natural gas ; (d) setting cost benchmarks for midstream and downstream petroleum operations; (e) provide pricing and tarifT frameworks for natural gas in midstream and downstream gas operations and petroleum products based on the fair market value of the applicable petroleum products: A 150 2021 No. 6 l'erro!eu111 Imlm·t1J' llcJ, 202 l if) advise the Government, government a gene ies and other stakeholders on commercial matters relating to tnriff and pricing frameworks: (g) develop open ncccs'> rules npplicnble to petro!ewn liquids ,:md natnral gas transportation pipelines, terminal foci lit ies nnd bulk storage foci! itics: (h) regulate the bulk storage, distribution, marketing nnd transportation pipelines of petroleum products; (i) grant, issue, modify, extend, rene\\, review, suspend, cancel, reissue or terminate licences, permits and authorisations for midstrcnm ,rnd downstream petroleum operations; (J) monitor and enforce compliance with the terms and conditions or licences, permits and authorisations issu1.xl by the Authority; (k) keep public registers of~ (i) licences, permits and oth..::r authorisations issued by the Authority, and (ii) renewals, assignments, amendments, suspensions or rcvocntions : ({)set.define and enforce approved standards and regulations for design, construction, fabrication, operation and nw.inti:n.utee of plants, instnllntion.s and facilities used or to be used in midstrenm and downstream petroleum operations ; (m) carry out enquiries, tests, audits or investigations and rnke other steps to monitor the midstream and downstream petroleum operations; (n) ensure security of supply, development of the nmrkets and competition in the markets for natural gns and petroleum products: (o) ensure third party access to facilities under gas processing licences, transportation pipelines and transporlntion networks and midstream bulk storage facilities, when~ such facilities are operated for the account of the owner; (p) develop rnles for trading in wholesale gas supplies to gas distributors: (q) establish customer prote<.:tion measures in accordance with the provisions of this Act ~- (r) pub! ish decisions. direct icn::; or ddcrm inat ions or the Authurity thnt have implications for customers :md ind1Jstry participants, togethi.::t· \\' ith the reasons for sue h dee isions. cl ire i.:,_, .-,, ··; ,'!" de!.: rn 1in at ions \v hi ch, in the llp in i011 of the Authority, shall be pub!isi·. (s) promote the interests of,;_ ·.,mers with regard 1,, midstream rrnd downstream petroleum operatio - (t) promote the principle;; , - .. l1nomic dcveior: 1::,., •., f in frnstrui.:turc with regur<l to midstream and J·_ ,,. nstrearn petroleun, c ;·--.:/:lli('11;; : Petroleum Industry Act, 2021 2021 No. 6 A 151 (u) promote competition and private sector participation in midstream and downstream petroleum operations; (v) determine the domestic gas demand requirement and the crude oil required for the domestic crude oil supply obligation and ensure that economic and strategic domestic demands are met; (w) regulate the supply, distribution, marketing and retail of petrolemn products; (x) administer and monitor strategic stocks of petroleum products; (v) monitor the application of petroleum product prices, pricing formulae and frameworks ; (z) monitor market behaviour with respect to midstream and downstream petroleum operations; (aa) identify, investigate and prevent abuse of dominant positions and restrictive business practice with regard to midstream and downstream petroleum operations; ( bb) establish, monitor, regulate and en force tee h n ic a I, hea Ith, environmental and safety measures relating to midstream and downstream petroleum operations; (cc) develop, specify and monitor technical and safety standards for wholesale marketing, processing plant, retail marketing and bunkering of petroleum products; (dd) ensure the accuracy of metering pumps and related measurement facilities in midstream and downstream petroleum operations; (ee) define and enforce approved standards and guidelines for the design, procurement, construction, operation and maintenance of p!ants, insta Ila tion s and facilities in the midstream and downstream petroleum operations; (If) establish laboratories to provide data storage and testing, quality assurance and certification of crude o iI, na tu ra 1gas and petro Ieum products and regulate the activities of third party Iabo ratories used in mid stream and downstream petroleum operations; (gg) keep and classify records, data and reports as may be prescribed in regulations or guide Ii nes ; (hh) ensure the promotion of safety and development of midstream and downstream petroleum operations; (ii) issue certificates of quality and quantity Lo exporters of crude oi !, LNG and petroleum products; (zi) implement and enforce compliance ,vith lm-,s, regulations and policies relating tom idstream and downstream petroleum operations; A 152 2021 No. 6 Petroleum !ndusllJ' Act, 2021 (kk) establish parameters nnd codes of conduct for operators in the midstream nnd downstrenm petroleum operations; (l/) monitor the financial viability of operators with respect to midstream and downstream petroleum operations; (111111) develop, maintain and publish a database of midstream and downstream petroleum operations; (nn) monitor and ensure that the quality of petroleum products sold in Nigeria conform to defined spec ifi ea ti ons ; ( oo) establish, monitor and ensure co mpl ia nee with the sta nd:mls for I he processing of petroleum products in Nigeria; (pp) request information and documents re!nting to liceneed activities, including pricing information and macro-economic data from any licensee or permit holder in midstream and downstream petroleum operations: (qq) publish or direct licensees, lessees and permit holders to publis!1, in the interest of the public, in formation re!nting to midstream and downstream petroleum operations in accordance with applicable law or regulation: (rr) regulate the domestic base price mid the prices applicable to wholesale customers of the strategic sectors and gas distributors; (ss) perform such other function as may be neeesstuy to give effect 10 the provisions of th'ls Act; (!!) ensure and monitor performance p.1rameters of industry playi;:J'S and the quality of service provided by servicing companies in the midstrenm and downstream petroleum industry; and (uu) conduct studies relating to the economy and efficiency and effectiveness of the mid stream and downstream petroleum industry. Regulations 33. Subject to section 216 of this Act, the Authority may make by the regu Iations- Authority. ( a) concerning the processing, refining, transmission, distribution, supply, sale and storage of petroleum and petroleum products as \veil as other midstream and downstream petroleum operations; ( b) establishing those midstream and downstream petroleum opera! ions to be subject to a licence or permit from the Authority: (c) establishing the applicntion criteria .:rnd procedure for licences and permits for midstream and downstrenm pdrn!eu111 operations: (d) establishing the procedure for review and approval of !iccnci:: ,rnd permit applicn1io11s for midstream and downstream petroleum opel'aiio,is; ( e) estab Iish ing the durnl ion and condition:-; of Iicences and permits LJr 111 id;;tr.:::im nnd do\rnstrc;m1 petro!cu m llpcnl!ions : Petroleum !11dus11:v Act, 2021 2021 No. 6 A 153 (/) concerning those licences and permits already in effect prior to the date of any regulations issued by the authority for midstream and downstream petroleum operations; (g) establishing the conditions and procedures for the \rans fer, surrender, suspension or revocaiion of iicem:cs aad pi.::nnits for midstream and downstream petroleum operations; (h) establishing the procedure for the modification of licences and permits for midstream and downstream petroleum operations; (i) establishing the penalties and enforcement mechanisms in respect of breaches of the regulations issued by the Authority ; U) monitoring processes for midstream and downstream petroleum operations; (k) concerning the construction and operation of. nnd third party access to, infrastructure for midstream and downstream petroleum operations ; (l) concerning the production, transportation, and sale of petrochemicals and lubricants; (111) concerning the national strategic stock ; (11) establishing tariffs for midstream and downstream pelrolcurn operations ; (o) Concerning domestic natural gas supply and demand; (p) concerning natural gas trnding and export: (q) ensuring the continuity and security of the supply of natural gas, crude oil, and petroleum products to customers; (r) concerning rights of wny und pertaining to surface rights : (s) relating to the retail sate and cl istribution of petroleum products; (t) concerning dispute resolution and customer protection; (11) regulating pricing regimes for midstream and downstream petroleum operations; (v) establishing -fees payable to the Authority subject to section 3 (I) (i) of this Act; (1r) concerning compctit ion and an ti-compc!il ivc behaviour: (x) establishing public and non-public registries in respect of licences, permits and authorisations issued by the Authority, to be maintained by the Authority ; and (v) any other matters as may be determined by the Authority under this Act which includes imposition of gas narc penalty arising from m idstrearn operations which shnl I be for the credit of the Midstream and Downstream I ~ l A 154 2021 No. 6 Petroleum fndusilJ' Act, 2021 Gas Infrastructure Fund, and shall be uti Iised for midstream and downstream gas infrastructure investment within Lhc Host Community of a designated facility. Governing 34.---{ l) There is es tab Iishcd a Governing Bomd (in this Act re f'crrcd Board of 1he to as "the Board of the Authority'"), ;vhid1 shall be rcsponsibk: for the policy Authority. and general administration of the Authority. (2) The Board of the Authority shall consist of- (a) one non-executive chairman ; (b) two non-executive members; (c) the Chief Executive of the Aulhority (in this Act referred lo as .. the Authority Chief Executive"); (d) two other executive cl irectors n.:sponsiblc for finance and· accounts and distribution systems, storage and retuiting infrastructure; (e) one representative of the Commission not below the rank ofcxct.:utivc commissioner; (f) one representative of the ivl in is try not below Lhe rank or Director; and (g) one representative of the Minislry of Finance not below the mnk of Director. (3) Appointments to the Board of the Authority under this section shal! be made by the President and be subject to confirmation by the Senate. except for the appointments of ex~officio members under subsection (2) {e), {f) and (g). (4) A person appointed under subsection (2) (o) and (b) s!wll have al least 15 years post-qun!i ficatio11 experience i 11 petroleum or other re levnnl sector of the economy and shall hold offlce ror a period of five years nnd m,1y be re-appointed for a further term or five years, on such terms n nd cone! il inns as may be specified in the letter of appoi ntmcnt. (5) Subject to subsection ( 4) and section 41 (3) of this Act, a mcm bcr or the Board of the Authority shall hold office for five years and may he re- appointed for a further term of five yenrs. (6) A non-executive Board member shall hold office on part-time basis. (7) The Board of the Authority may nutlwrise in writing nny executive director, committee of the Board of the Authority, the Authority Ch icf Executive or any other officer or employee of the Authority. to exercise any pv\\cr oi· carry Ol!t any duty or function of the Authority under this Act or n::gu lntinn made under this Act. Petroleum !11dus/Jy Ac!, 202 l 2021 No. 6 A 155 (8) The proceedings of the Board of the Au1hority and other nncillary matters shall be as prescribed by regulation rnnde under this /\et.

35. The Board of the Authority slmll- l-'unrli(111, ur 1hr \luard (a) be responsihle for the !onnu la tion of po! icy. supervision and giving ut"thc strategic direction to the Authority; Alllhnrh:,. (b) provide general guidance for the carrying out of the n.111ctions of the Authority; (c) review and approve the bt1sincss, strategic ,md operating plans ofthc Authority; (d) consider and approve the annuri I btidgct or the /\uthority be lore submission to the National Assembly for appropriation: (e) approve the management accounts and audited accounts the or Authority and considerthe management letter from the external auditors: (() determine the tei-rns and conditions of service of emp [oyees of the Authority~ (g) recommend remuneration, a.\lowances, bendits and pensions of employees of the Authority in consultation with the National Salaries, Incomes and Wages Commission, having regai·d to the- (i) specialised nature or work to be performed by the Authority, (ii) need to ensure the finane ia! self-su ffic ieney of Lhe Authority, and (iii) remuneration and allowances paid in the private sector in upstream petrn!eum operations Lo individuals with equivalent responsibilities, expe1tise and ski! Is; (h) structure the Authority into such number of tkpnrtrnenls as it deems lit for the effective performance of the functions of the Authority ; and (i) performance of other functions as may be necessary for the efficient and effective adrn inistration of the Authority under this Act. 36.-{ I) Executive directors of the Authority shall be paid from the Rcnrnnr111\ i1 ,n funds of the Commission such remuneration and a\lo\\ances ns applicable. rn1d nllo11a11cc~ (2) The Authority shall comply with the policy nm! guidelines of the ul'111cmb,·1, National Salaries, Incomes and Wnges Commission regarding 1·e111t111erntions. ol'tlic llo;ml ol"lh..: i\utl1uri1:,.

37. A member of tbe Board of lhe Authority mny be suspended or Suspc1i~ii,n 01' l'Cl1l!ll;1I 111' removed from office by the President where lhc mcrnbcr- n 111,:111l1~r 111· (a) is found to bc- th~ B11.11·d 01· lh~ (IJ unqualified for appointment under section 3cl or this /\et. 1\111lwrit;- A 156 2021 No. 6 Petroleum lmlust1:r Ac!, 2021 (ii) unquali ficd subsequent to his appointment. and At! No 3. (iii) in breach of conflict of interest provisions in the Companies and

2020. Allied Mntters Act or any regulation rcgarr.ling con nicts o !"interest passed under this Aei ; (b) ceases to be an employee of the minist1y or agency he represents on the Board of the A111hority; (c) has demonstrated ml inability lu e!Tcctively discharge the <lulies uf his office; (cf) has been absent from the meeting ol"lhe Board of the Authority for three consecutive times without the consent of the Chainnan or in the case of the Chairman. wilhout the consent or the President, except where gond reason is sho\',n for the absence ; (e) is found guilty of serious misconduct by a court or tribunal of competent jurisdiction: or (f) has, under the law in force in any country- (i) been adjudged or declared bankrupt or insolvent and has 1101 been dischari-6ed. (ii) made an assignment to or arrangement or composition with his creditors which has not been rescinded or set aside, or (iii) been declared to be of unsound mind. Resignation 38. A non-executive member of the l3oard or the Authority may resign ofa non- his appointment by giving hvo month·s written notice to the President. cxccuti\"e member of the Board of the Authorit). Vacancy on 39. A vacancy on the Board or the Authority shall occur. where a the Board or member of the Board- the t\mhorit). (a) dies: (b) is removed from omce in accon.lnncc with section 37 ofthis/\ct: (c) resigns from office ; (d) completes his tenure of of!ice : or (e) is incapacitated. Fi!!ingof 40. A vacancy on the Board or the Authority shall be filled by tht.: ,ucancy on appointment of another person in accord,mce with section 34 of this Act. the Board orthc Authority. Pelroleum lnduslry Act, 2021 2021 No. 6 A 157 41.-{l) The Authority Chief Executive is the accmmting officer and Amhorit~ shall be responsible for the administration of the alfairs orthc Authority. Chic!" l::\L'CU!hc (2) There shall be seven executive directors for the Authority, whose and appointments shall comply with the Federal Character Commission Act subject E:wcuti\c Din:ctur.; uf to confi nnation by the Senate with each responsible ior one o fthe io llowing-------- lhc (a) Hydrocarbon Processing Plants, Installations and Transportation 1\11thnrity. Infrastructure ; Cap. 1'7. I.FN. 20!~1. (b) Distribution Systems, Stomge and Ret:iiling lnfrnstrncture; (c) Health, Safety, Environment and Communily; (d) Economic Regulations und Strategic Planning: (e) Corporate Services and Administration; (f) Finance and Accounts; and (g) Midstream and Downstream Gas lnfmstructure Fund. (3) A person to be appointed as Authority Chief Executive and as an executive director of the Authority shall have extensive managerial, technical or professional knowledge of the midstream and downstream petroleum operations with a minimum of 15 years post-qualification cognate experience. (4) The Authority Chief Executive shall be appointed on such tenns and conditions as may be set out in the letter of appointment, except as otherwise provided for in this Act. ( 5) An executive director shal I be appointed on such tcm1s and comli lions as may be set out in !he letter of appoinlment, except as otherwise provided for in this Act. (6) The Authorily Chief Executive shall be appointed for an initial term of five years and may be re-appointed for a further lcrm of five years, subject to confirmation by the Senate. (7) The President may, not later than 90 days prior to the expiration of the tenure of the Authority Chief Executive or an executive director. re-appoint the Authority Chief Executive or exec ul ive d ircctor or appoint another qua Ii fied person. ( 8) A person shal I not be appointed as Authority Ch icf Exccu live, where the person- (a) is likely to be in breach of conflict of interest provisions under the A.::1 '\o .,. Companies and Allied Matters Act or regulation made under this Acl; 2020 - ( b) has a financia 1 interest in 11 ny business coml<..-ch::d. di rci.:t ly ur ind irci.:t ly vdth the petroleum industry: A 158 2021 No. 6 l'etroleum /J1dus11:i, Act, 2021 (c) is engaged in any activity for rcmuncrntion or otherwise connc,tcd with the petroleum industry; (d) is a relative of a person who has an interest or is engaged in ,1ny of the activities under pnragraphs (a)-(c). provided t!rnt- (i) such person may be appointed Authority Chief Executive or m; :m executive director if he dcclnres bis inleresl and makes nppropri/H(..' arrangements to ensure the avoidance or n conflict or interest, (ii) the President is satisfied that the interest or activity shall not intcrlcrc with the person's impartial dischmgc of his duties as the Authority Chier Executive or as an executive director, or (iii) the financial interesl is term inn led prior to the appointment taking effect ; or (e) has, under the laws in force in any co1111try- (i) been adjudged or declared bankrupt or insolvent and has not been discharged, (ii) made an assignment to or arrangement or composition with his creditors, which h.is not been rescinded or set aside, (iii) been declared to be or unsound mind, (i-v) been convicted of a11y criminal offence by a court of competent jurisdiction except for traffic offences, (v) been disqualified, or (vi) suspended from practising his profession by the order or a competent authority. Employ~cs 42. The Board of the Authority sh.i 1l determine the number or persons \irthc that shall be employees of the Authority. Authority. Terms and 43.----( l) The employees of the A111hority shall be Sl1bject to terms and conditions of conditions set out by the Board of the Authority. sen·ice in the Authority. (2) The terms and conditions of service referred to in subsection ( ! ) may provide for- (a) the appointment, promotion, dismissal nnd discipline or employees: (b) appeals by employees agninst dismissal or other disciplin:iry measures ; and (c) the grant of pensions, gratuities and other retirement benetits tn employees. (3) In this section, ·'appointment'" includes secondment, translcr and con tract a ppo intmen ts. Pelroleum Industry Acl, 2021 2021 No. 6 A 159 (4) Employees of the Authority shnll be ··public ollicers.. as defined in C;1p.<::2J. the Constitution of the Feclcra I Re pub Iic of N igc r ia. I 999. LFN. 200-1. (5) Employment by the Authority shall be subject to the provisions oft he t\t:I No 4. Pensions Reform Act and officers and employees or the Authority shall be 20 l•I. entitled to pension and other retirement benefits us prescribed under the Pensions Reform Act. (6) Nothing in subsection (5) shall prevent the Authority from appointing a person to an office on terms that preclude the grnnt of pension or other retirement benefits in respect of that office.

44. The Board of the Authority, in consultation with the Nat ion a I Sa larics, Rcnmm:raliun Incomes ancl Wages Commission, shall determine and periodically review the :md nl!O\\;IIICCS remuneration and allowances paynb le to the employees of the Authority. having or regard to the------- cmplll)CCS (a) specialised nature of work to be perfornml by the Authority; of the Authority. (b) need to ensure the fimmcial sclt:sufficicncy of the Authority; and (c) remuneration and allowances paid within !he petroleum industry to individuals with equ iva Ient responsi bi Iities. expert isc a ncl ski 11 s. 45.--{ I) The Authority shall, not later than 30th of September of each Stalcm..:111 111' year or such other date that th c Mini stc r resp<;ms ible for 13 ud get and Nat ion al cslima1.:d incomcnnd Planning may determine, prepiire and present to the National Assembly. a c·q,cmliturc statement of estimated income and expenditure of the Authority for the next orthc financial year. Authority. (2) Notwithstanding the provisions of this section, the Authority may also, in any financial year, submit to the National Assembly supplementnry or adjusted statements of estimated income and expenditure of the Authority. (3) The financial year of the Authority shall be ,l period of 12 calcndur months commencing on the I st or Januaiy in each year or such other dale as the Minister of Finance may determine. 46.--{l) The Board of the Authority slrnll appoint a Secretary, who Sccrc!iir) shall- Ill tb1.· Autlloril~. (a) be the Legal Adviser to the Authority; (b) attend meetings of the l3oarcl of the Authority and keep minutes, corporate records and the common seal of the Authority~ and (c) carry out such administrative and other secretarial duties as the Authority Chief Executive and the Board of the Authority may direct. (2) The Secretary slmli _be ri legal practitioner with a minimum of lO years post-qualification experience. A 160 2021 No. 6 Petro/e11111 /11dus11T Act, 2021 Funds of 47.-{ 1) The Authority shall maintain a Fund (in this Act referred to the as "the Authority Fund'.) into which money nccrning to the Commission shnl I Authority. be paid. (2) The source of the Authority Fund shall be- (a) money appropriated by the National Assembly for the Authority; (b) fees charged by the Authority for services rendered to licensee:,;. lessees, permit holders and other authorisations issued by the Authority: (c) 0.5% of the wholesale price or petroleum products sold in Nigeria. which shall be collected from wholesale customers; (cl) income derived from publications made by the Authority and other related activities, including data sales; (e) fees paid to the Authority for using facilities owned or managed by the Authority; and (f) money accruing to the Authority by way of grants, aids. gifts. testamentary dispositions. endowments and con tri but ions. (3) The Authority Fund shall be applied- (a) to meet the approved budgetaiy obligations of the Authority: (b) to meet the administrative and operating cost of the Authority: (c) to pay salaries, wages, fees or other remuneration or allowances. pensions and other retirement benefits payable to employees of the Authority; (cl) to acquire and maintain any property acquired by or vested in the Authority; (e) for investments, as provided under the Trustee Investments Act or any other applicable legislation. subject to the approval of Minister responsible for Finance ; and (f) in connection with any of the runctions of the Authority under this Act. (4) At the end of each financial yenr, any money that accrued to the Authority Fund under subsection (2). which have not been utilised for the purposes provided under subsection (3). shall be paid into the Consotidntcd Revenue Fund. (5) The Authority may accept grants of money or property on such terms and conditions as may be specified by the person or organisation making the grant, provided that- (a) the terms and conditions of the grunt are consistent with the obji.:!t:Livcs and functions of the Authority; or Pelroleum lnduslry Act, 2021 2021 No. 6 A 161 (b) no such grant is accepted from any person or organisation reglllated by the Authority. (6) Nothing in subsection (6) shall be construed as authorising the Authority Chief Executive, directors, officer or employee of the Authority to accept any grant for their personal use. (7) The Authority sha 11 keep proper nccounts of its income and ex pen di ture for each financial year and cause it to be audited within six months after the end of each financia 1year by auditors appointed by I he Authority from a Iist and in accordance with guidelines supplied by the /\uditor-General for the Federation. (8) The Authority shall submit to the Minister- (a) a mid-year report of its operations and finances not later thun the 3 I st of August of each year ; (b) an annual report of its operations and performance ; and (c) an audited financial account for the year, not later than 31 st of March of the following year. (9) The Authority shall, not later than the 31 st of March of each year- .. (a) submit to the Minister a summary of its annunl report and audited financial accounts; and ( b) publish the rmnua I repmt and audited fin a nc ia! accounts on its website. ( 10) The provisions of .my enactment relating to the taxation ofcompanies or trust funds shall not apply to the Authority. 48.--{ I) Any Government ministry, department or agency exercising Notice 10 any power or function or taking any action, which may have direct impact on the midstream or downstream petroleum operations shall consult with the Authority Aul hnrily. priorto- (a) issuing any regulation, guideline, enforcement order or directive; ( b) exercising any sue h power or function ; or (c) taking any such action. (2) The Authority shall review the recommendations of the Government ministry, department or agency and communicate decision accordingly and the decision shall be complied with by the relevant Government ministry, department or agency. A 162 2021 No. 6 Petroleum lndu.1·11:v Act, 202 l Spcciut 49.-(1) The Authority shall in carrying out its functions under this Ai.:! powers of have special powers to- the Authority. (a) inquire, inspect, examine or invcsligatc any business or ,1ctivity relating to midstream or downstream petroleum operations under this Act, where if bcf icvcs tlrn t i !!egnl rn idstn::nm or downstream pctro lcum operations are going on ; (b) conduct surveillance on petroleum liquids and natuml gas insta 11111 ions, premises and vessels where it be! ieves tlrnt i Ileg,1 I midstream or dow11strcum petro Ieu m opcrn lions nre going on ; (c) enter any midstrcrnn ordownstrc,1111 wcllsitc, plant, facility or p!nec- ( i) at which pctro Ieum Ii quids o iI or 11 nturn I gas is re ti ncd. processed. stored, handled or treated, or (ii) that is used i11 connection with any midstream or downslrcmn wel lsite, plant, foci 1ity or place where petroleum liquids or m1 lurn! gas are refined, processed, stored, handled or treated ; (d) enter at any reasonnblc time premises containing any records or property required to be maintained under this Act or related lo the administration of midslream or downstream petroleum operations under this Act for the purpose of inspecting those records or that properly : (e) require any person or his agent, reprcscn1,1tivc, partner, director, olliecr or employee engaged in midstream or dmvnstrcam petroleum opera! ions to- (i) answer any question that mny bi: relevant to the inquil)'. inspect irn1. examination or investigation, nnd (ii) provide 11 ny required in forrna t ion con tu incd i11 a corn pu ter hard,\ nrc or software or nny other dalri storage, processing or n::tricvnl device nr system used in connection with tlw business or activities rcl11ti11g lo midstream or downstrearn petroleum operntions under this Act: (f) take any sample or carry out any tesl or examination us iL may consider necessary in the pcrfonmmcc of its functions : {g) use any m idstrenm or downstrcnm mach incry, equ ipmcnl, app! inn cc or thing as it may consider necessary in the perlormance of its fun et ion.~ : (h) remove for c;.;amination and copy anything that may be relevant ltl the inquiry, inspection, examination or investignLion, including removing any computer hard ware or software or any other data storage, processing or retrieval device or system ; (i) in conjunction with tlic Nigeri,1 Police or other law e11forcc111cnt agencies, nrrest with a \varnmt, any pcrson reasonably believed to have committed an o!lcncc under this Aet : and Petru!e11111 hu/11s11:i· ;Jct, 202 l 2021 No. 6 A 163 U) exercise any other power Lhat may be conferred on it under any law or regulation. (2) An entity, person or agen!, representative, rnrtncr. director, officer or employee ofthat entity or person under investigation by the Authority shall~ (a) grant access to officers or the Authority with regurd to any place, wellsite, plant, facility, midstream or downstream nwchincry, equipment, appliances or things that nrny be relevant Lo the i11vesl igutio11 ; and (b) provide on request, any book. account, rceord, document, voucher, information and explanation relating to midstream or downstream petroleum operations as the officers of the Authority moy require. (3) An entity, person or agent, representntivc, partner, director, o!Ticer or employee of that entity or person who foils to comply with subsection (2) commits an offence and is Iin ble on con vi et ion to~ (o) a minimum fine of NS,000.000 or n term ol' imprisonment for live years, and (b) in the case ofa continuous offence, to an additio1rnl minimum fine or NI 00,000 for each day during which the offence i.:m11 inues. (4) The Authority shnl ! in the exerc isc of its powers under this section avoid undue hindrance of entities and persons en gagcd in lnw ru l midstream or downstream petroleum operations.

50. The special powers of the Authority under section 49 of this Act Spc~i11I shal! be performed by the Speciul lnvestigntion Uni! ol'the Authority or any 1111 c~1ig:uion llnil. person authorised by the Authority. 51.--(l) The Authority Chief Executive, n director or any omcer of the Jnd,•n111it: Authority shall each be i11den111if'ied out or the Authority Fu11d against any Df ol'lkcr~ 01·11ic 1iability incurred in defending any proceeding against the Authority or brought ;\111 lwri I:, against him in his official capacity. (2) Notwithstanding the provisions of subscct ion {1), the Authority slrn 11 not indemnify the Authority Ch icf Executive, a diret:tor or any off'icer of the Authority for any liability incurred ns a result of wilful misconduct or gross negligence. 52.---( I) There is estab Iishcd the M iclsrrcnrn nnd Downstream Gns The Infrastructure Fund subject to nppropriation by the National Assembly, which 1\ 1id st rc:1 n 1 and shnll be- Du II I l~l n.',I 11\ (a) a body corporate with perpetual succession and a common senl : nnd (ins I11 fra\tru~ Itire· (b) reside in the Authority ns prescribed in aci.::ordancc with this Act. Fund. A 164 2021 No. 6 Pelro/eum lndu.1·11:I' Act, 202 l (2) The Midstream and Downstream Gas lnfrnstructure fund shu!I have the power to acquire, hold and dispose of property, sue mid be sued in its corporate name. (3) There shall be a Governing Coum.:i! which shall supervise and make investment decisions for the Fund. (4) The Governing Council shall comprise thi.,'- (a) Minister, who shall be the Chairman of the Council; (b) representative of the Central Bunk of Nigeria not below the rank of a director; (c) reprcsentntive of the Ministry of Finnnce not below the rank of n director; (d) Authority Chief Executive; (e) Executive Director Midstream aml Downstream Gas Infrastructure Fund~ (/) three independent members, who shall be appointed by the President for a term of four yc11rs and may be reappointed for another four years and no more; and (g) Legal Adviser of the Authority who sha II serve as the Secretary to the Governing Cou nc iL (5) The Executive Director. Mid stream and Downstream Gas Infrastructure Fund sha!l- (a) have extensive managerial, technical or professional knowlc(lgc of the midstream petroleum opernlions, and fund management or any other relevant industry with a minimum of 15 years' post-qunlification experience ; and (b) be responsible for project management nnd administration of the Midstrenm and Downstream Gas lnlrastrncture Fund. (6) The members referred to in subsection (4) (/) shall have extensive managerial, technical or professional knowledge of the midstream petroleum operations, fund management or any oth1.:r relevant industry with a minimum of 15 years post-quu 1ification cognate cxpcriencc. ( 7) The source of the Midstream ,md Downstream Gas In frast rue t urc Fund shall be- (a) 0.5% of the wholesale price of petroleum products und natural gas sold in Nigcrin. which shall be collected from wholesale customers and such levy shnll be in nddition Lo the levy provided for under section 4 7 (2) (c) ; Pelrofeum bu/11.,;lly Act, 2021 2021 No. 6 A 165 ( b) funds and grants accruing from multi lateral agencies. bi latera I instil ut ions and related sources dedicated partly or wholly fi.)r the development of infrastructure for midstream and downstream gas opcr.11ions in Nigeria; (c) interest, if any, payable in respect of money in Lhc Midstream ,md Downstream Gas Infrastructure Fund; (d) money received from gas Oaring penalties by the Commission under section 104 (4) of this Act. shall be for the purpose of environmental remediation and relief of the host communities of the scttlor on which the penalties are levied; and (e) any other sum, freely donated or accruing to the Midstream and Downstream Gas Infrastructure Fund for development of infrastructure in midstream gas operations. (8) The Authority shall ensmc the prompt puymcnt of ,lll such sums directly into the Midstream -nnd Downstream Gas Infrastructure Fund's Account. (9) The levy under section 52 (7) ( a) of this Act shal I become due within 21 days of the sale of petroleum products und naturnl gas sold in Nigeria, and the Authority shall, after consultation with the Council, make regulations for- (a) administration procedures; and (b) penalties for- (!) late payment of the levy. (ii) non-payment of the levy, or (iii) submission of false information in respect of the levy. (10) The purpose of the Fund slmll be to m.:1kc equity investments of Government owned participating or shareholder interests in infrnstructme related to midstream and downstream gas operations aimed at~ (a) increasing the domestic consumption of natural gas in Nigeria in projects which are financed in part by private investment; (b) encouraging private in vestment through risk sharii1g by participating initially in selected high risk projects and in such other equity investments that encourage in vestmcn t in midst rea 111 and downstream gas infrastructure ~ and (c) reducing or eliminating gas llare. ( 11} There shall be a Transaction Advisor, who shall be responsible for providing transaction advisory services, including technical and commercial evaluation of proposals, defining project screening criteria and pro fitabi Hty target for projects and any othel' duty as nrny be assigned by the Council on behalf of the Fund. A 166 2021 No. 6 Pefro!em11 !11d11sr1:1· Acr. 202 l ( 12) The Trnns:1ction Advisor stui!l b.:: sckclc<l on need ln1sis tlmrngh a competitive and 1rn11sparc11t critcrin spccilied by the Council ,md th.: selce1io11 process sha I! be managed by the Exec u l i vc Di rector, M ids! ream and Downstream Gas Inl'rnstrncture Fund subjeel to the approval of !he C0111H.:it. ( I 3) The Transaction Advisor sha 11. in perlbrm ing his duties under subsection ( 11 ), submit reporl of his Ji nd ings and recommendntions to the Council. ( 14) The M id st ren m and Dow nst ream G ns In J'rastrnct urc Fund s ha !I be managed as follows- (a) the Council shall at the beginning ofevc1y finnncial year, npprove the Midstream and Downstream Gas lnfrnstrnclure Fttnd"s programme or or action with its cos\ implications and the Accountnnt-Gcnernl the Federal i,m shall release the npprovcd amount for lhal rinnncin! year, subjee1 to npproprintion by the National Assembly; (b) the money in the Midstream and Downslrenm Gns !nl'rnstructure Fund's Account that is not utilised as prescribed under this Act shall be held or invested as the Council mny direct : (c) an annual stntcment or the Midstrcum and Downstrcnm Gas Infrastructure Fund shall be prepared and submitted to the Council and Minister of Finance alter three months of the end of the finnnc i:1 ! yc:ir lo which they relnte; (d) a ce11ificd nnnual nuditcd accounts orthc Midstrenm and Downstren111 Gas Infrastructure Fund, together with a report on the operations or the Midstream and Downstream Gas Infrastructure Fund, shall be submilled to the Council within six months of !he end of the financial year lo which they relate ; and (e) a cert itied ann ua I aud itcd accou nl s or the Mid stremn and Downs\ ream Gas Infrastructure Fund shall be published anmm!ly. (l 5) Earnings. interest and other income uccruing from the equity investment made under subsection ( ! 0) s!Jal! be paid d irect1y to the M idstrcmn and Downstream Gas Infrastructure Fund's Account. ( 16) Interest and other incomes nee ruing li·t1111 the equ i ly investment or the Midstream and Downstream Gas !11!i·aslructurc Fund cun be re•invcstcd in other secured 1ow risk in vestments as :1 p proved by the G ovcrn i11 g Cn une i!. ( 17) The members of the Governing Council shn Il be pn id such a !lowances from the funds of the M i<l s! ream n nd Downstream Gas Infrastructure Fund in ,1ccorda11ce with the approved guide] ines by the Revenue Mobilization, Allocation rind Fiscal Commission. Petroleum Industry Act, 2021 2021 No. 6 A 167 PART V-THE NIGERIAN NATIONAL PETROLEUM COMPANY LIMITED

53.-(1) The Minister shall within six months from the commencement Nigcri,111 of this Act, cause to be incorporated l'!1derthe Companies and Allied Matters N:1limrnl Act, a limited liability company, which shall be called Nigerian National l'~·trnlcum Cumpnn~ Petroleum Company Limited (NNPC Limited). Limit..:d. (2) The Minister shal I at the incorporation ofNN PC Limited, consu It with Acl Nn J. the Minister ofFinance to determine the number and nom ina ! value of the shares 2020. to be al Jotted, which shal Iform the initial pa id-up share capita I of NN PC Limited and the Government shall subscribe and pay cash for the shares. (3) Ownership of all shares in NNPC Limited shall be vested in the Eighth Government at incorporation and he 1d by the Ministry of Fi 11<1 nee Incorporated Sd1cduk. and the Ministry of Petroleum Incorporated in equal portions on behalf of the Federation and the Ministry of Petroleum Incorporated is incorporated under the provisions of the Eighth Sc hedu Ie to this Act (4) The Ministry of Finance Incorporated and the Ministry of Petroleum Incorporated in consultation with the Government, may increase the equity capital ofNNPC Limited. (5) Shares held by the Government in NNPC Limited are not transferable inc !ud ing by way of sale, assignment, mortgage, or pied ge unless approved by the Government and endorsed by the Nat ion a I Economic Cou nc iI on beha If of the Federation. (6) Not-.vithstanding any provision to the contrary in the Companies and Ac1 No J. A11 ied Matters Act and except by way of security, any sale or transfer of shares 2020. of NNPC Limited shall be at a fair market value and subject to an open, transparent and competitive bidding process and the sale or transfer of the shares ofNNPC Limited shall be on equal proportion basis ofslmres held by the Ministry of Finance l ncorporated and the Ministry of Petroleum Incorporated. (7) NNPC Limited and any of its subsidiaries shall conduct their affairs on a commercial basis in a profitable and efficient manner without recourse to government funds and their memorandum and a11ic\cs of association shall state these restrictions, and NNPC Limited shall operate as a Companies and Act No J. Allied Matters Act entity, dee !are dividends to its shareholders and retain 20% 2020. of profits as retained earnings to grow its business. (8) Where NNPC Limited has a participating interest or 100% interest in a lease or licence, NNPC Limited shall pay its share of all fees, rents, royalties, profit oil shares, taxes and other required payments to Government as any company in Nigeria. A 168 2021 No. 6 Petroleum /nduslly Act, 2021 Transfer of 54,-{ l) The Minister and the Minister o rFinance s!mll within 18 months assets nnd of the effective date detenn ine the assets, interests and Iiabi Ii ties ol'NN PC lll liabilities. be transferred to NN PC Limited or its subsidiaries and upon the ide11 t ifie a Iion, the Minister shal I cause such assets, interests and liabilities to be trnnsf'encd to NNPC Limited. (2) Assets, interests and liabilities of NNPC nol transferred to NNPC Limited or its subsidiary under subsection (I), shall remain the assets, interests and liabilities ofNNPC until they become extinguished or translcrrcd to the Government and six months following the determination under seclion 54 (1) of this Act, the Minister, the Minister of Finance nnd the Attorney- General of the Federation sha 11 develop n fm m ework for the paymc n t lhe or liabilities not trnnsferred to NNPC Limited and if such determination or which assets, interests and I iabi!ities to be trnnsfcrrcd has not been concluded within the stipulated period of 18 months, all the assets, interests, liabilities of NNPC is deemed to be transferred to NN PC Limited after 18 months from the effective date. (3) NNPC shall cease to exist after its remaining assets, interests and liabilities other than its assets, interests nnd liabilities transferred to NN PC Limited or its subsidiaries under subsection (I) sha! I have been extingu ishcd or transferred to the Government. (4) Bonds, hypothecations, securities, deeds, contracts, instruments. documents and working arrangements with regards to assets, intercsL~ or liabi Iities transferred to N NPC Limited or any of its subsidiary under subsect ion (1) and which remains subsisting before the dnte of transfer shall, beginning from the date of transfer, be effective and enforceable against or in favour or NNPC Limited. (S)Any pending action or proceeding brought by or against NNPC bef'on:: the transfer date with regard to assets, imerests or liabilities transferred to NNPC Limited under subsection (I) may be enforced or continued by or against NN PC Limited as the successor of NN PC. ( 6) Notwithstanding the provisions of subsection (S}----: (a) an action or proceeding shall not be commenced against NNPC Limited, its subsidiary. director, officer, employee or agent with regard to asset, interest or liability ofNNPC Limited, where the time for commencing the action or proceeding would have expired had such asset, interest or liability not been transferred to NNPC Limited or its subsidiaries; ,ind (b) the transfer of asset, interest and Iiability of NN PC to NN PC Limited under subsection ( l) shall not create or be deemed to have created a new cause of action in favour of a- ( Petroleum l11d11stry Act, 2021 2021 No. 6 A 169 (i) creditor of NN PC, or (ii) party to a contract, agreement or arrangement with NNPC that Second was entered into before the dale of trnnsfer. Schcd11I.·, (7) For the purpose of this section and the Second Schcd u le to this Act, "assets, interests and liabilities" means tangible, intangible, real or persona! property, rights and obligations, in ench case of all types. (8) Subject to any arrangements that NNPC \ms entered into, any debt to NNPC related to outstanding cash calls under joint venture agreements shall become debt of~ (a) NNPC Limited where the assets have been transferred to NNPC Limited under subsection (I); and (h) Government where the assets have not been transferred under subsection (2). (9) The initial capitalisation ofNNPC Limited shall be not less than its financial requirements to effectively discharge its commercial role and deal with its o bIi gations and Iiab i1it ies transferred to NNPC Limited. 55.~l) The Minister shall upon incorporation ofNNPC Limited, consult Appoinlmcn1 with the Minister of Finance to appoint NN PC Limited as agent ofNN PC for nfNNPC: the purpose of managing the process of winding down the assets, interests Limited :1:; agcn! nr and liabilities ofNNPC. NNl'C. (2) Subject to the appointment under subsection ( 1), the NN PC Limited shall have the power to deal with the <1pplicable assets. interests and liabilities ofNNPC and may enter into contract with third parties on such assets, interests and liabilities. (3) Pursuant to the appointment under subsection ( I ), NN PC sha I1- ( a) not deal with the appl icablc assets, interests and 1iabil ities; (b) at the request of NNPC Limited execute and deliver any document and do such other acts or things as may be required by NN PC Limited with regard to any asset, interest or Iiabi Iity referred to under subsection (I) ; and (c} pay a nominal fee of US $1 to NNPC Limited as administrative charges on the applicable assets, interests and liabilities to which NNPC Limited has been appointed under subsection (I). (4) The cost ofwinding down I he us sets, intercsts an<l tia bii j ties o fN NPC shall be borne by the Government. A 170 2021 No. 6 Petroleum Indm·11:r Acl, 2021 (5) A cause of action shall not arise in tort, contract or otherwise between N1'1PC and NNPC Limited in respect of the applicable assets, interests llr liabilities to which NNPC Limited has been appointed as agent under subsection ( 1). Subsistence 56. Subject to section 92 (3) (a) of this Act, any guarantee granted or of guarantee. issued by the Government with regard to the transfer of liability ofNNPC L(} NNPC Limited under section 54 of this Act shall be enforceable against the Government as if such liability was a liability of NNPC, provided that such guarantee was effective prior to such transfer. Transfer of S7.--------( I) Upon incorporation ofNNPC Limited under section 53 of this employees Act, employees ofNNPC and its subsidim-ies shall be deemed to be employees und ofNNPC Limited on terms and conditions not less favourable than that c11inycd conditions of service. prior to the transfer of service and shall be deemed to be service for employment related entitlements as specified under any applicable law. (2) NNPC Limited shall continue to fulfil the statutory obligntions or NNPC in relation to the pension scheme of employees of NNPC and its subsidiaries prior to the date of incorporation of NN PC Limited. The Board 58. There shall be a Board of the NNPC Limited which shall perli..lrrn ofNNPC its duties in accordance with this Act, the Companies and Al lied Maucrs Act Limited. and the articles of association of NN PC Limited. Act No 3, 2020. Composition 59.--------( I) Except as set ol!t in this section. the composition orthe l3oard of the Board of the NN PC Li 111 ited sha lI be determined in accordance with the Co 111 pail ics ofNNPC and Allied Matters Aet and its Articles of Association. Limited. Act No 3. (2) The Board of NNPC Limited shall be appointed by the President 2020. and composed of- (a) a non-executive chairman ; (b) the Chief Executive ofNNPC Limited: (c) the Chief Financial Officer of NN PC Limited; (d) a representative of the Ministry or Petroleum, not below the rank of a director; (e) a represent.ntive of the Ministry of Finance, not below the rank or n director; and (/) six non-executive members w i I h at !east ! 5 years post-qua Ii fica t io 11 cognate experience in petroleum or any other relevant sector of the economy one from each geopolitical zone. I'etro!e11m /11d11s11y Acl, 202 l 2021 No. 6 A 171 (3) A person to be appointed as lhc Chief Executive of NN PC Limited shall have extensive managerial, technical and proFcs~ional knowledge ill the petroleum or other relevant industry with at least l 5 ycnrs· post-qualification experience. (4) In the abse11ce of the Chairrnan, the members o!'the Board ofNNPC Limited may appoint a non-executive member of the Bonrd to act as alternate Chainnan. (5) The provisions of this section shn\! apply where NNPC Limited remains wholly-owned by the Government and where NN PC Limited is not wholly owned by Government, the corn position of the Bmml ofNNPC Limited sha! 1be determined by the share hold crs o fN N PC Li 111 ited in accordance with the provisions of the Companies and Allied Matters Act and the articles of At.:l Nu 3. association ofNNPC Limited. 1010. 60.-----{ I) The Board ofNNPC Limited shall, within Lhrce months of the ('nmmilli.:c.'> incorporation ofNNPC Limited, develop formal and trnnsparcnt process for nrthc llu;inl the creation of its committees and nomination of members of the Board ol' 111' NNl'(' l.i111i1cd. NNPC Limited to the committees. (2) The mandate, composition and proccd ures or each committee oft he Board ofNNPC Limited shall be comprehensive and open for inspection by the shareholders of NNPC Limited. (3) The Board ofNNPC Limited shall nominate 11011-executive memb()rs of the Board capable of exercising independenl judgment to its comm iHces where there is likelihood of conll ict of interest (4) The Board ofNNPC Limited shall have cornrnitlees for- ( a) ensuring the integrity of financial and 11011-linnne inl reporting; (b) the nomination of Board of NNPC Limited members and key exec11tives ; (c) remuneration of rnern bers of the 13oard of NNPC Li 111 ited ; and (d) any other committee as the Board of NNPC Limited 111ay consider appropriate.

61.-( I) Members of the Bonrtl of NN PC Limited shn!! discharge their 1\ppli,11iio11 responsibilities in accordance with the highest standards, practices and principles ur pri11cipk ol' ~urpor.ilc' of corporate governance. gi i1·cnia1 ic·c (2) 111e Board of NN PC Li 111 ited sha !L upon req ucst by one or more of shareholders holding not less than 10% of the voting intcrcsl s in NNPC Li 111 itcd, provide a comprehensive written exp Ian at ion of any 11 ct ion or dee is ion tn ken by the Board ofNNPC Limited to its shareholders, provided that the Board or A 172 2021 No. 6 Petroleum /11d11s11y Act, 2021 NNPC Limited may withhold the explanation if permitted under a duty or confidentiality NN PC Limited owed to any thin! party. 1\mrnal audit 62.-( !) NNPC Limited shall ensure thut an annual nudil or NNPC nfNNPC Limited is conducted by ,m independent. competent. experienced mu! qualifo:d Limited. auditor. (2) The auditor of NNPC Limited shall provide an externa I and objccl ivc assurance to the Board of NN PC Limit cd and s ha rcho Id crs of N N PC Li rn iled that the financial statements of NNPC Limited foir1y represent the financial position and performance of NNPC Limited. (3) Where the auditor of NN PC Lim i!ed is unal1 le to prov idc the ass urn 111.:1...· required Lmdcr subsection (2), the Board ofNNPC Limited slrnl! immcdintdy convene an extraordinary general meeting of the company to- (a) notity the shar\!holders of NNPC Limited; and (b) consider any action that may be necessary in tlrnt regard. RCSJX11Sibilities 63.-( I) The Board of NNPC Limiti.!d shall, in nddi!ion to its nl'the Bourd responsibilities under the Companies and Allied Matters Act and its articles of ofNNPC association- Limited. Act No 3- (a) be responsible for the slmtcgic gu itlance and determining the business 2020. structure of NNPC Limited ; (b) be responsible for the approval of the ,rnnual budget or NNPC Limited; (c) act in good faith and exercise due diligence and care in the best interests of NN PC Limited, the slrn re holders and the susw ina bi!.!" development of Nigeria; (d) apply the highest ethical stamfords in performing its duties, l,1king into account the interests of its stakeholders and the fiduciary duty or tht: directors to NNPC Limited ; (e) make decisions· g.uided by commercial nnd tcchnic;i1 consi,Jerations that represents good international petroleum industry practices; (f) determine and report to the shareholders of NNPC Limiled 011 key performance indicators on at least annun1 basis ; (g) review and guide corporate strategy, major plan of action, risk policy and business plan ; (h) set performm1cc objectives for NNPC Limited, the 13oard of NNPC Limited, members ofNNPC Limited's management and individual business units and su bsidiarics o fNN PC Lim itcd ; (i) monitor NNPC Limitcd's corporate pcrfi.xmance: Petroleum Jmlus11:v Act, 2021 2021 No. 6 A 173 (j) oversee major capital expenditures, acquisitions and divestitures; (k) monitor the effectiveness of NNPC Limitcd·s goveumnce practices and propose and implement changes; (l) select, compensate, monitor and replace management executives and oversee succession plan ; (m) align key executive and Board or NNPC Limited remuneration with the longer term interests of NNPC Limited. its shnrcholders und stakeholders ; (n) monitor and address potential conflicts or interest or management and members of the Board ofNNPC Limited nm\ brend1 orliduciary duly by members of the Board of'NNPC Limited: (a) ensure the integrity of NN PC Limitcd·s m:counting and finnncinl reporting systems, including audit of NN PC I. i Ill itcd ·s accounts by independent third party; (p) ensure that appropriate system of control is in place for risk management, financial and operational control and comp\innce with app Ii cab le law and re \evan t standards ; (q) oversee the process of disclosure nnd communicntions to shareholders nnd the public; and (r) determine the dividend policy of NNPC Limited, ensure sustained growth and a sound financial bnse forNNPC Limited. (2) The provisions of this section shall be incorporated into the memorandum and articles of association of- (a) NNPC Limited at the time of its incorporation; and (b) ench of the NNPC Lim itccrs who!!y-owncd subsidiaries as ii' references in this sect ion to · NN PC Li 111 ited · we re rcfcrc nces to sue h wholly-owned subsidiary. (3) A member of the Bonrd o fthc NN PC Limited s!rnll be suspended or removed from office by the President, where the mcmber- (a) is found to be---- (i) unqualified for appointment under section 59 of this Act, (ii) unqualified subsequent to his nppointmenL or (iii) in breach of con nict of in tcrest provisions in the Companies and Act Nn 3. Allied Matters Actor any regubtion regar<lingeon!licb, or interest passed :w:m. under this Act; (b) ceases to be. an em ployce or the ministry or agency he rcprese nts on the Board of the NNPC Limited: A 174 2021 No. 6 l'etroleum ]11(/u.1·11:r Act, 2021 (c) has demonstrn!cd an inability to effectively perform the duties of his office; (d) !ms been absent from the meeting of the 13oard of the NNPC Limilcd for three consecutive times \vithout the consent of the Clmirnmn or in the case of the Chairman, without the consent of the President, except wherl' good reason is shown for the absence ; (e) is found guilty of serious misconduct by a rnurtortribunnl ofcompck·111 jurisdiction; or (f) has, under the law in force in any country~ (i) been adjudged or declared bankrupt or insolvent and lrns not been discharged, (ii) made an nssignmcnt to or arrangement or composition ,.vith his creditors which has not been rescinded or set aside, or (iii) incapable to discharge the duties or his office as a result of int1rm ity of body or mind. Objectives 64. The objectives ofNNPC Limited shull include to- ul'NNPC Limited. (a) carry ou1 petroleum operations on a commercial basis, comparnb!c to private companies in Nigeria carrying out similar activities including Act No. 14. 2007. exemption to Public Procurement Act, Fiscal lksponsibility Act nncl Treasury Single Account. Act No. 3 I.

2007. (b) NNPC Limited to be vested as the concessionaire of ull Production Sharing Contracts (PSC), Pro tit Sharing and Risk Service Contracts ns the National oil company on behalf of the Federation in line with its competencies: (c) lift and sell royalty oil and tax oil on belrnlrofthe Commission and the Service respectively for an agreed cornmcrciu! fee and in the case or pro lit oil and profit gas payable to the concessionaire, NN PC Limited shall promplly remit tht· proceeds of the sales of the profit oil and profit gas to the Federal ion less its 30% for management fee and r ront icr Exp Ioration Fund as spcc i!i ed in section 9 (4) or this Act; (d) carry out test nrn rketing to ascertain the value of crude oi I and report to the Commission; (e) be vested with the righ1s to natural gas under production slturing contracts entered into prior to and after the effective date of this Act : (f) carry out the management or product ion sharing contracts for a fee, based on the proril oil share or pro lit gas share in accordance with paragraph (c) ; (g) with respect to :my joint operating llgrccment in which NNPC i:; a party on the effective date assume the working interest held by NNPl' Petroleum Industry Act, 2021 2021 No. 6 A 175 irrespective of whether such licence or lease is converted under section 92 of this Act; (It) engage in the business of renewables and other energy investments; (1) promote the domestic use of nalural gas through deveiopn1t:11t and operation of large-seal e gas uti Iisation industries : (i) maintain the role of NN PC, under section 54 of this Act ; (k) carry out task requested by the Commission or Authority on a fee basis and generally engage in activities that ensure national energy security in an efficient manner, in the overall interest of the Federation ; (/) carry out such other tasks as may be determined by the Board of NNPC Limited; and ., (m) make NNPC Limited s u pp 1ier of last resort for security reasons and 2 all associated costs shall be for the account of the Federation. 65.----( I ) NNPC Limited a11d other parties to joint opcrnt ing agreements 1:s1ah!is!11nc111 in respect of upstream petroleum operations, may on a voluntary basis of incorpvrntc1I restructure their joint operating agreement as a joint venture carried out by joi111 \ l'l1 turl' way of a limited liability company, each referred to as an "incorporated joint cumpm1ks. venture company" (IJVC), based on the principles established in the Second 51.-cond Schedule to this Act. Schedule. (2) The IJVC referred to in subsection (I) shall not be subject to the /\cl No 3 l. ,, 2007. provisions of the Fiscal Responsibility Act and the Public Procurement Act. \ Act No 1·1. (3) The proposed IJVC stnicture shall be an indcpe11dent entity, having a 2007. '' strong commercial orientation and transparent company operal ion for the 1J V C shareholders, with clear rules for accountability. CHAPTER 2-ADMlNlSTRATlON PART I-GENERAL ADMINISTRATl()N i 66,H I) The objectives of Chapter 2 are to------ Ohjcct i\'C~. (aj promote the exploration and exploitation of petroleum resources in Nigeria for the benefit of the Nigerian people; (h) promote the efficient, effective and sustainable development of the petroleum industry; (c) promote the safe and efficient operation of the transportation and distribution infrastructure for the petroleum industry~ (d} provide the framework for developing third ptirty nccess arrangements to petroleum infrastructure ; A 176 2021 No. 6 Pelroleum J11dust1:i· Ac!, 2021 (e) encourage and focilitale both loenl and foreign investment in !hi.: petroleum industry; en promote transpnrency and accountnbitity in the ac!ministrntion or petroleum resources in Nigeria; (g) develop, where appropriate, compclitive markets !or the sale nnd distribution of petroleum and petroleum products; (h) promote safe and affordable ncccss to petroleum and petroll:urn products in Nigeria; (;) promote the processing of pi.!tro!cum within Nigerin nnd the development of fuel and chemical industry and other related valuc-nddcd products and activities; (j) create a conducive business environment for operations in the petroleum industry: (k) promote the liben1lisation ofthc downstream petroleum industry: (l) establish an orderly, fair and competitive commercial environment within the petroleum industry; and (111) ensure that petroleum operations ure conducted in a manner thut protects the health and safety of persons, property and the env i ronmenl. (2) The provisions of Chapter 2 of Lhis Act shall apply to- (a) activities within or associated with petroleum operations nnd the petroleum industry ; and (b) persons conducting such activities. Management 67. The administration and management of petroleum resomccs and or their derivatives shall be conducted in accordnnce with this Acl and !11e petroleum principles of good governunce, transparency 1111d sustainable development or resources. Nigeria. PART 11-ADMIN!STRATION 01· UPS'fRFAM PETROLEUM . OPERATIONS AND [\JVJRONMENT /\dministra- 68.-(1) Title to nny data and its interpretation relating to ups! remn lion of petroleum operations are vested in the Government of the Federation ofNigcri,1 m:reageand and shall be administered by tile Commission. 1csting of unta. (2) The Commission sha! I administer any acreage for upstream petroleum operations in Nigeria. (3) Where a significnnt petroleum discovery is made inn frontier bnsin, the Minister may, on the recommendation ofihc Commission. reclassify all or part of the basin from frontier acreages to a general onshore area mid the fiscal terms applicable to onshore under this /\cl shall apply to- Petroleum lmlmfly Ac:t, 202 ! 2021 No. 6 A 177 (a) new licences and leases in the basin after reclassification; and (b) any existing tease upon renewal, provided thnt it sha! I not be applied to licences and leases existing ot the moment of rcclassificotion.

69.-(l) The Commission shall, after consultation with the Surveyor- National Genera I of the Federation, adopt a not ion a! grid system for acreage gri<l sy~1cm. management. (2) The grid system referred to under subsi.:ction (I) shnll be based on the UTM system or any other projection system in use by the office of the Surveyor-General of the Federation. (3) The Commission sh a! I es tab! ish a system for 11 u111 be ring of pa rce Is, which slml! allow for subdivision and aggregation of the parcels. (4) The basic unit of the grid system shall be a parcel of one square ki lometer, subject to adj ustmenl of the zones and national boundary. (5) The Commission may further subdivide parcels into equal units of one hectare or such sub-units as the Commission may deem appropriate. (6) The national grid system referred to under subsection (1) shall be used for the administration of upstream petroleum operations, including- ( a) the definition of Iice nee and lease areas ; ( b) re Ii nqu ishments ; (c) bid procedures ; (d) identification of well locations; (e) petroleum conservation measures : and (f) other regulatory and acreage management procedures. (7) Any current boundary of a licence or lease, \vhich does not conform to the new nation al grid system sh a11 remain una ltercel and ·be apportioned in parcels.

70.-( I) There sha II be the fol lowing 1iccnces and leases under this Act Lii.:cn,·c~ 1111d related to upstream petroleum operations- lca~c~. (a) petroleum exploration licence, which may be gnmled to qualified applicants to carry out petroleum exploration operations 011 a non-exclusive bnsis; (b) petroleum prospecting licence, which may be grnntcd to qualified applicants to- (i) drill exploration and appraisal wells and do corresponding test production on an ex.elusive basis, and (ii) carry out petroleum exploration operati1.111s on a non-exclusive basis; and A 178 2021 No. 6 Petroleum /11dus11:v Act, 202 I (c) petroleum mining lease, which nrny be granted to qualified applicants to-- (i) win, work, carry away and dispose of crude oil, condensates ,md natural gas on an exclusive basis, , (ii) drill exploration and appra isa I wel Is and carry out the re lalcd test ·: p~~duction oh an exclusive basis, and (iii) carry but.petroleum explor?,tion operations on a non-exclusive basis. Act No 3. (2) A licence or lease may be granted umler this Act only to a company 21l20. incorporated and v,1lidly existing in Nigeria under the Companies and Allied Matters Act. Petroleum 71.--{l) The Commission shall be responsible for granting of petroleum exploration exploration licences. licence. (2) The holder ofa petroleum exploration Iicence sha 11 have non-exe 1usivc right to carry 09t.petroleum exploration operations within the area provided for in the IicencJ. (3) A petroleum exploration licence shal I be for three years and may be renewable for additional period of three ye,i rs subject to fu !fi lment of prescribed conditions, but shall not include any right to win, extract, work, store. carry away, transport, export or otherwise treat pctroleu m discovered in or un dcr the licence area. (4) A petroleum exploration licence may cover an area that includes petroleum prospecting licences or petroleum mining leases, provided tlmt the holders of such Iicences or leases, sha lI have no ob I igation to purchase the results of any survey conducted under the petroleum exploration licence. (5) A petroleum exploration licence gran led in respect of frontier acreages may include a provision pcm1itting the licensee to select, based on the rcsul! of his exploration work and be granted one or more petroleuq1 prospecting licences prior to the termination of the 1ice nee containing the fiscal provisions stipulated in Chapter 4 of this Act. (6) The Commission shall have sole right and title over any acquired raw and interpreted data obtained by a Ii censee pursuant to a petro !eu m ex plornl ion licence, provided that the licensee shall be entitled to grant a data use Ikence to a third party subject to a written authorisation by the Commission. which shall not be unreasonably withheld. (7) A licensee is entitled to a fee from a third party for data use licence granted under subsection (6) and shall remit to the Commission any ngrccd portion of the fee due to the Commission.·• Petroleum lwlusfl:v Act, 2021 2021 No. 6 A 179 (8) Exploration activities conducted pursuant to a petroleum exploration I icence shal I be monitored and athn in istcred by the Com miss ion in accordance with regulations made under this Act (9) The Cof11_mission shall have sole right and tit le over all acquired and interpreted data _fromexisting speculative survey agreements entered into with the Depart~tint 9f P~troleum Resources on be!mlf or the Government prior to the effective date. ( 10) The carrying out of geological. geophysical or geochemical surveys for scientific or educational purposes in relation to petroleum do not require a petroleum exploration licence, where the results or such surveys are not for sale or commercial gain.

72. (I) The holder of a petroleum prospecting lit:ence shall, Sllbjecl to l'clrulcum the fulfilment of obligations imposed by this Act, have~ prn.'i"'cclin,l! lkcncc. (a) exclusive right to drill exploration and appraisal wells and non- exclusive right to carry out petroleum exploration operations within the area provided for in the licence ; and (b) right to carry away and dispose of crude oil or natural gas won or extracted during the dri 11 in g or exp lorn t ion or nppr.1 isa 1we Ils as a resu It of production tests, su bjcct to the fu I lilment of obligations imposed by this Act. (2) A holder of the petroleum prospecting licence sha II not be granted an extension except as prescribed under sections 78 (4), (9) and 79 (6) of this Act. (3) Where a ho! der of a petroleum prospecting. 1iccnce fo i Is to fu l fi I any term or condition oft he licence, it slmll not, except ns provided in the licence, give the Minister a right of c\ai m against the licensee Qr be deemed a breach of the licence, if the failure arises from force majcurc. (4) Where there is any delay by a Iiecnsee in the fulfilment of any term or condition of a p etro leu m prospecting Iiccnee ea used by force majcure, l he period of such force majeure shn 11 be added to the period fixed for the fol fi lment of the applicable tem1 or condition, provided that such period shall not exceed three years in total after which. the licence mny be terminated by the Commission or the Iicensee. ( 5) The Minister may grant a petroleum prospecting Iicencc to a q un Ii fic<l applicant recommended by the Commission and s!m 11 not grnn t such Iicence lo any other person and where the Minister does not grant the ticcncc, the Minister shal I in form the Commission in writing for the rat ion a le of the dee is ion. A 180 2021 No. 6 Pelrolewu !11du.,11:i,· Ac!, 2021 or (6) Notwithstanding the provisions this sec! ion, a petroleum prospect in!!, licence may .also be granted under section 93 of this Act. Bidding 73.---{ l) Subject to the provisions or sections 71 (5), 74 (3 ). 81 ( 1) nm! process. 93 (2) of this Act. pctro Icum prospecting Ii ccn cc or petroleum mining Ie.1 sc shall only be granted- (a) based on a fair. trnnsparcnl and competitive bidding process~ and (b) in compliance with the provisions orthis Act, rcgu lations mt1dc nmlcr this Act and licensing round guidelines issued by the Commission for each licensing round. (2) The Commission may periodically publish a licensing round plan. (3) Subject to section 71 (5) and Gthcr provisions ofthisAct, the Minister may, on the recommendation of the Commission, grunt a petroleum prospecting. licence or petroleum mining lease lo a winning bidder in ncconlancc with section 74 of this Act, provided that tit c winning bidder has comp l icd with the requirements of the bid invitation. ( 4) The Minister shall inform the Commission of his decision within 90 days of the application fbr licence or lease and where he fails to inform the Commission within the stipulated lime. the licence or lease shall be deemed granted. J\\YtJrd 74.---{ I) The grant of a petroleum prospecting licence or n petroleum process. mining lease on a previously appraised arcn ort1 petroleum prospecting liccni.:l' 01· a surrendered, rcl inqu ished or revoked petroleum mining lease in, under or upon the territory of Nigeria, shall be by nn open. trnnsparent, competitive and non-discriminatory bidding prncess conducted by the Commission under section 73 (I) of this Act. (2) The winning bidder shall be determined on the basis orthc following bid parameters- ( a) 11 si ngf e bid parn 111c te1~ , vh ic h sh,1 II be bHscd on any one u rt l1e fo 1lo,vi ng parameters~ (;) a signature bonus to be paid in full prior to the grnnting or the licence or lease by or on behalf of the winning bidder, (ii) a royally interest, (iii) a profit split or prolil oil spl ii. (iv) a work progra mmc comm iI men! d mi ng the init ia I exp I orn I ion period, or (v) any other parameter ns mny be tlelined specific to a bit! round; and I'elro!eum flldm/1)' Acl, 2021 2021 No. 6 A 181 (b) a combination of the bid parameters specil'icd in paragraph (a) or this subsection, based on a points system assessable by the bidder in such a manner that the bidder with the highest aggregate number or points sha 11 be the winning bidder. (3) Notwithstanding the bidding parameters prescribed in subsection (2), where there is a bilateral or multi-lateral agreement between Nigeria and another country, the Government may, for strategic purpose and in return for substantive benefits to the nation, direct the Commission to negotiate und award a petroleum prospecting Iiccncc or petroleum mining lease to a qua Ii ficd investor identified in the agreement or treaty. (4) A signature bonus paynble in respect of any Iicence or lease awarded under subsection (3) shall be based on a transparent method for evaluating the acreage. (5) The Commission slml! call for bids in accordnm:e with a procedure published on its website and in at least two internatiom1I financial newspapers and two national newspapers with wide coverage. (6) Where the Commission calls for bids pursuant to this section, it shall prescribe in a regulation or guide Ii ne the minim urn pre-qua Ii Ji cat ion criteria or prospective bidders in terms of technical nnd financial requirements and previous experience. (7) The bids received based on the bid parumders prescribed in subsection (2) through an open, Ira nsparen t and com pctitive bidding process, shal I includ~ an electronic bidding process, open lo pub Ii(,; and conducted in the presence of representatives of the Nigerian Extractive Industry Transparency Initiative, the Federal Ministry of Finance and the Federal Ministry of Petroleum Resources.

75. The licensing round guidcl ines slml! be acco111pa11 ied with the model I .i~.:u,ing licence for the petroleum prospccti ng licence or model lc;1sc fi.1r the petroleum round mining lease for the bid round and shall include the- guiddin.:~. (a) licence or lease acreages, the term and miniinum work obligations; (b) requirements to be fulfilled by the bidders and the pre-qualification criteria, as the case may be ; (c) bid parameter; (d) Iist of documents required and crite1'i.i for the eva Iua Iion of tee h nica 1 capacity, financial competence and Iegal status ol' interested parties ; and (e) details and cost for the acquisition ofrelevanl data and studies. A 182 2021 No. 6 /'etrofeum lndm·try Ac/, 2021 Model 76. The model licence or model lensc for each bid round slml! rc!ler.:l licence and the conditions of the licensing round gu idclincs for the bid round and sha! I model lease. in all circumstances include the following clauscs- (a) description of the acreage ; (b) term of the licence or lease: (c) minimum work programme and minimum level of invcstmcn!; (d) details of guarnntces to be provided by the licensee or lessee regarding the performance of its licence or lensc obligations ; (e) deta i Is ofo bi igat ions regarding re Iinq uish rnent, decommissioning and abandonment; (f) rules for the resolution of disputes including arbitration. mcd iation. cone iIiation or expert <lcterm ina ti on : (g) appl iea b Ie sanctions in the even I of fa iIurc by the Iiccnscc or 1cssct: to comply with the terms and conditions or the licence or lease; and (h) such other clauses as the Commission may deem necessary. Duration and 77.---{ I) A petroleum prospecting licence for onshore and shallow water afl!i\Of acreages shall be for a duration of not more than six years. comprising of m1 pctro!eum initial exploration period of three years and an optional extension period of prospecting licence. three years. (2) A petroleum prospecting licence for deep offshore and frontier acreages shall be for n duration of not more than I 0 years, comprising of nn initial exploration period of five years and an optional extension period of flvc years. (3) The area provided for in a petroleum prospecting licence slrnll not exceed- (a) 350 square kilometres for any onshore or shallow water acreages; (b) 1,000 square kilometres for any deep olTshore acreages; and (c) I, 500 square kilometres for any frontier acreages. Work 78.-{ 1) A pctro Icum pros pee ting !icencc shn It contain a rcqu i rement commitment that the licensee commit to a work programme and such other terms ,rntl wmrnercia! conditions as the Commission shall determine. disco,wy :ind (2) A licensee shnl I, during the initfal exploration period and the optirinal significant extension period provldcd for in a petroleum prospecting licence, commit to J:!i!S <liscon:r). drill at least one exploration well to a minimum depth specified in the licence for each period, except for frontler acreag.es, where the work program <luri 11g the initial exploration period may only consist of geophysical work. Petroleum Indus11y Act, 2021 2021 No. 6 A 183 (3) Where a licensee makes a discovery during the initial exploration period or the optional extension period provided for in the nppl icable petroleum prospecting licence, the licensee sha II inform the Commission within I 80 days of the di scovel)' if he considers that the discovery merits a ppm isa I or is of no interest to him. (4) Where a licensee considers that a discovery merits appraisal, the licensee shall submit to the Commission within one year for approval- (a} a commitment to an appraisal programme of not more than three years with a scope and nature permitting.the licensee to declare a commercial discovery, where the result of the appraisal is positive; and (b) the appraisal area, not larger than the outer boundary of the discovery, as determined by the licensee and a zone of not more than two kilometres surrounding the outer boundary, provided that the appraisal area does not extend beyond the area provided for in the applicable petroleum prospecting licence. ( 5) The Commission sha 11 act on the a pp rova I request for the appraisal programme within 60 days after its submission and a licensee shall, upon the approval of the appraisal programme and appraisal area by the Commission, promptly carry out the committed appraisal programme. (6) Where the Commission fails to act on the npprnisal programme referred to under subsection (5) within 60 days. the appraisal shall be deemed approved. (7) The provision of section 88 (3) of this Act shall upply to any appraisal area under subsections (5) and (6). (8) The licensee shall, upon the completion or the appraisal program- (a) declare a commercial discovery; (b) declare a significant gas discovery or u significant crude oil discovery; or (c) inform the Commission that the discovery is of no interest to the licensee. (9) Where a significant gas discovery or significant crnde oi I discovery has been declared, the licensee shall be entitled to retain the area of such significant gas discovery or significant crude oil discovery fi.x n retention period as may be determined by the Commission, which shall not be more than l 0 years from the day the declaration was made and with the approval of the Commission a licensee is entitled to drill further appraisal wells. ·,. A 184 2021 No. 6 Petroleum !11dust1:r Acl, 202 l ( 10) The retention area of a signi lie ant gas discovery or significant crud-: oil discovery shall continue to subsist pursur111t to a petroleum prospecting Iicence unti ! the expiration of the period tmdcr subsection (9) or dcc!nr.itkm l)r a commercial discovery by the licensee. ( 11) The Commission shal ! approve nn area of a significant gas d iscovei)' or significant crude oil discovery which s!rnll not be larger than the outer boundary of the discovery declared by the licensee, including a zone or not more than two kilometres surrounding the outer boundary, provided that such area shall not extend beyond the area described in the applicable petroleum prospecting licence. (12) The provision of section 88 (3) of this Act shall apply to any retention area. (13) Where, upon the expiry of the retention period determ incd under subsection (9), the Iicenscc has not dcclnrcd a commercial discovery, the men declared under subsection { 9) sh.a I! be immedia tc ly re Ii nq uished by the lieen sec. (14) Upon the relinquishment of the relent ion area with the latest expiry date referred to in subsection ( ! 3 ), the appl icab!c petroleum prospecting Iiccnce shall expire. ( 15) Where a Iicensee dee lares a d iscovel)' of no interest under subsection (3) or (8), the Commission may require the relinquishment of the parcels that cover the structure of such discovery. ( 16) A commitment by a !icensee under lh is section shall be suppl)rted by a bank guarantee, letter or credit or performance bond issued by a bank acceptable to the Commission for an amount determined by the CornmissilHl. ( I 7) The l icenscc sh a !l i11 cac h en lcndnr year prcsen t an a 11 nun! work program and status report as prescribed by regulations for approval by the Commission and such program sha! Ias n minimum, contain the comrnillt:d V\ ork. Commercial 79.~( I) Where a Iict:nsee under a petroleum prospecting Iiecncc uiscovery declares a commercin! discovery under section 78 (8) (a) or this Act, the und field licensee shall \Vithin two years of the declriration, submit to the Commission ;i Je,elopmem plan. field development plan with regard to the commercial discovery together with a commitment to carry out the ,vork described in Lhe field deve loprnt:nl plan. (2) The Commission shall evaluate the teclrn ital and commercial terms of the field development plan and slrnll only approve the field development plan where--- {a) it meets the teclrnical standards required for petroleum operations based on good international petroteu111 indusl!y practices; Petroleum lndus/Jy Ac!, 2021 2021 No. 6 A 185 (b) the location of the measurement point, measurement processes and equipment are acceptable to the Commission; (c) it results in the maximum economic recovery of crude oil, natural gas and condensates from the applicable reservoirs; (d} it meets the health, safoty and environ men tni standnn.ls. as determined by the Commission ; (e) it provides for the efficient and commercial use of facilities for midstream petroleum operations; (/) it does not involve excessive capital or operating expenditures; (g} it inet udes an approved Nigerian content plan pu rsu nnt to the Nigerian J\\:1 Nu 1. Oil and Gas Industry Content Development Act; :rn10. (h) it includes an environmental management plan in a form that complies with section 102 of this Act; (i) it includes a decommissioning and abandonment plan and a decommissioning and abandonment fund that complies with sections 232 and 233 of this Act; (i) it provides for the elimination of routine naturn I gas Ila ring ; (k) it does not relate to upstream petroleum operations that are in conflict with domestic gas delivery obligation; (/) it includes- (i) a detailed programme for the recruitment and training ofNigerians in all phases of petroleum operations handled directly by the licensee or through agents and contractors of the licensee. and (ii) provision for scholarship schemes, internships. continuous pro foss ional deve Iopmen l and at her trn in in g requirements ; (m) it complies with the obligations to host communities undet Chapter 3 of this Act; and (11) it i nc lu des a develop mc nt pc ri ad suffic ie nt Io construct any req ll ired infrastructure and the development of the field. (3) Where the development of a commerciul discovery requires construction of facilities for midstremn petroleum operations in a manner integrated with the upstream petroleum operations, u licensee may submit the development plan as a single integn1ted project, which may be reviewed by the Commission. (4) Where a single integrated project is su bm ittcd, the C 0111 mission sha 11 review and implement the project based on its regulatory responsibilities. A 186 2021 No. 6 Petroleum Indusrry Act, 202 ! (5) Where a Iicensee does not submit a field development p!an and work commitment with in the period set forth in subsection ( 1), the area contain i11g the commerc ia I di scove1y sha !I be re Ii nqu ish ed. (6) Where the licensee has submitted a field development plan for the field, the licence sha 11 continue unti I the process for the grant or a lease has been completed or the Commission has decided not to grant the lease. (7) Where the I icensee esta b1is hes and secures approva I for a 11 app ra isa I area or declares a commercial discovery, a petroleum prospecting licence shall, where required, be extended unt iI the~ (a) grant of the petroleum mining lease; or ( b) dee line of the a pprova I for the appra isn I area or com mere ia1d iscovcry. (8) Notwithstanding the provisions of section 78 ( 10) of this Act, l he holder of the re ten ti on area sha 11 within two years after declaring a cornmerc in I discovery, submit to the Commission a field development plan that complies with the requirements in subsection (2). (9) The Commission shat! give its fino l decision to approve or disapprove a field development plan within 180 days after the submission of the fidd development p!an in corn pi ionce with the requirements in subsection (2) and a lease shall be granted upon the approval ol"the field development plan. (I 0) Where the Commission fails to respond to the field development plan within 180 days, the plan shall be deemed approved. ( 11) A commitment by a licensee under this section sha! I be supported by a bank guarantee, letter of credit or performance bond issued by a bnnk acceptab !e to the Commission for an am oun 1 cl eterm ined by the Co 111111 iss ion. (12) Upon approval ofa field development plan, no material modification shal! be made except in accordance with the approval provisions set out in subsection (2) and the submission and approval of an amended field development plan. (13) Upon the granting of one or more petroleui11 mining leases, the annual work program and status report referred to under section 78 { 17) or this Act shal I inc!ude the program and report for each lease. (14) A field development plan rnay be sub111itted in phases, with the detailed provisions under subsection (2) relating to the first plrnse nnd the possible subsequent phases described on n high level basis, with approvnl being sought only for the first phase and amended field development plan needs to be presented for each follO\ving phase \,here the lessee is willing to commit to such fo Ilowing phase. Petroleum Jmlustr:v Ac:!, 2021 2021 No. 6 A 187

80.-( 1) A licensee or lessee sha! ! promptly not ily the Commission or Unit b:uio11, nny petroleum reservoir which extends beyond the boundaries of its 1icencc or lease area. (2) The Commission may. fix the pmposc of ensuring optimum recovery of petroleum from a petroleum reservoir, require all petroleum operations relating to commercial discovery to be cnrried out by n I icensec or lessee on the bnsis or a unitised development of the applicable commercial cl iscovct)', where- (a) the petroleum reservoir covered by an aren to which a licence or lease relates extends beyond the boundaries of such area into an area to which another licence or lease relates and in respect or which a different person is the licensee or lessee ; and (b) at least one licensee or lessee hns mncle a declaration of a commercial discovery. (3) The Commission may, upon receipt of n noti tication under subsection ( l) direct the applicable licensee or lessee to enter into a unit agreement to develop the petroleum reservoir as a unit, within a period of time to be determined by the Commission. which shall not be less thnn two years. (4) The unit agreement referred to in subsection (3) shall be approved by the Commission and sha [I- ( a) be based on terms agreed by the pn11ies nnd in a ronn that conforms with good international petroleum industry practices : and (b) contain terms and conditions as may be required by a regulation issued by the Commission under subsection (9). (5) A unit agreement shall, in nddition to the requirements of subsections (3) and (4)- (a) be based 011 reliable technicnl. operational nnd economic considerations ; (b) set out the proposed operator of the applicable uni! : and (c) set out technical infornrntion regnrding the petroleum reservoir subject to unitisation, including stnicture mapping, net pay nnd such other engineering and geophysical information as may be required by a regulntion issued by the Commission under subsection (9). (6) Where the applicable licensees or lessees are unnble to reach agreement within the time Ii mi t imposed by the Co 111 mission u11dcr s u bscct ion (3), the Commission may, in compliance \vith subsectitins (4) and (5), require the licensees or lessees to jointly appoint n consultant lo develop terms and conditions that are fair and equitnble to licensees or lessees :111d Government A 188 2021 No. 6 Pe1ro/e11111 !11dm·11y Act, 2021 and which shall be binding on the licensees or lessees after approvnl by the Commission and where the applicable licensees or lessees foil to nppoint ,1 consultant within two months after the requirement by the Commission, 1he Commission slrnll nppoinl the respective consultant and the remunerntion of the Consultant shall be p[!id by the licensees or lessees. (7) Where a pct1·o!eurn reservoir cxtend.s beyond the boundaries ol'tllc licence or lease into nn adjacent area which is not covered by a licence or lease, the Commission may- (a) extend the boundaries of the lici:ncc or !ease to include the entire petroleum reservoir within such licence or lense, provided that the licensee or lessee submits to the Commission a licld development plrn1 tlwt includes the additional adjacent area ac1;eplahlc to 1he Commission: or (b) conduct a bid round for the adjacent area in accordance with the licensing round guidelines and the provisions or Lh is Act. (8) Where a petroleum reservoir unitiscd under this section is abk In continue in production alter the expiration or one or more licences or k,1ses relating to the petrolet1m reservoir, the Commission may grnnt an extension or ·the licences and leases in the unitised field. (9) The Commission mny from tirnc tot irnc issue regulations in rela1inn to unitisation. l'ctroli!um 81.~( I) A petroleum mining lease sha !l be granted for euch comrncn: ial mining discovery of crude oil or natural gas or both, Lo the licensee of ,1 pe!roleum kas\!s. prospecting licence \.\·ho has- (a) satisfied the conditions imposed 011 the licence or the licensee under this act ; and ( b) received approva \ for the a pp Iica ble lie 1d deve \oprnc nt pIan rro m the Commission. (2) A petroleum mining lease shall be granted under sections 70 (2) and 74 of this Act, where a prospective lease :u-ea contnins petroleum l'ield with suspended wel Is or continuing cornmcrci,11 product ion, where the corresponding petroleum mining !e,1sc has: been revoked or has expired. (3) A petroleum mining lease grnntcd under subsection (2) 111ay include an appraisal phase und the develop111e111 and pro-luction of the field 1n.1y i11e!udc a work program reqllirernenl to enhunce ongoing production. (4) A Iicensee sh a I! subj cc t to su bscct ion {7), p roposc Llm t a sepa 111 te pt:( 1-n IL·u 111 mining lease be granted for ench commcn::ia! discovery to which n petroleum prospecting licern:c rel,1tcs: prior to the expiration of the applil!nblc petroleum prospecting licence. Pelroleum [l/(/11s11y Ac:!, 2021 2021 No. 6 A 189 (5) Notwithstanding any grant or a petroku111 mining lense under subsection (4), the applicable petroleum prospecting !il'c11ce shall continue for Lhe remaining area to which that licence relates for the duratilin provided for in that licence. (6) The area to which a petroleum mining least: rdatt:s and derived from a petroleum prospecting Iiccnce shal I be proposed by tlw I icensee. based on an independent engineering report, which shall 11ol be binding 011 the Commission. (7) The Commission shall npprove the proposed area, which shall contain every parce! within the outer boundary of the field bnscd 011 ni l-\vater contacts, spill point, intersection of planned development wells with the reservoirs or other reservoir l irn its, inc !ud ing a zone su rrou 11d ing th c boundary consisting of all parcels that are in whole or in part within one kilometre of such outer boundary, provided that such area s!rnll not contain pan::els- (a) outside the original licence area from which !he lc,ise is derived; (h) in areas relinquished by the licensee: or (c) in an existing petroleum mining !cnse. (8) The Commission nrny approve modificntion ofan arcn of a petroleum mining !ease to include further parcels as are approprintc, based on the criteria prescribed under subsections (6) and (7), where during the period provided for in a petroleum prospecting licence, the outer boundmy of the commercial discovery changes clue to further- (a) drilling _or other exploration activities ; or (b) petroleum discoveries in deeper or shal!O\\Cr formations. (9) Where two or more petroleum mining !eases derived from the same petroleum prospecting licence constitute a single lic!d based on an interpretation by the Com rn iss ion of geo logica I or petroleum enginceri ng data showing that the field is a single field, the lenses shall be considered as a single lease, notwithstanding that their boundnries do not join \;,.·ith another lease, provided the granting date of the single lease shall be the date of the first lease that was granted. ( I 0) A petroleum mining lease shall not consist or :m area that is less than one parcel or where a parcel has been subdivided under section 69 (5) of this Act. less than one subdivision of sue h parce 1. ( l l) Notwithstanding the provision5 of this sedinn, a pe!roleum mining lease may also be granted under sections 74 (3) mul 93 or this Act. A 190 2021 No. 6 Petroleum Jnd11.111y //cl, 2011 ( 12) Where n lessee n1t1 kes n se parn le com 111 ere ia l discovery u nd ernca t I1 the area of a petroleum mining lease in shallower or deeper formations, thc lessee may present a dr.::vclopmcnt plan lbr sud1 discovery nnd upon 11pprov:1I of such plan the lessee shall be granted 11 separnte lease for such comm en.: in I discove1y. E:-.c\usi1c 82.-{ I) A lessee undera petroleum mining !ease shal! have the exclusive right lo right to carry out the development and product ion or the petroleum w itJ1 respect t(UldUCl operations. to the formations under the lease area ns defined in the lense. (2) A lessee under a petroleum mining lease shall have the exclusive right to drill exploration and appraisal \\ells in the lease n'.en and the nun- ex.clusive right to carry out petroleum ex plllration operntions. (3) A petro\eun1 mining lease for conducting upstream petroleum operations shal! only be granted on the basis or a commitment l'rorn the applicable lessee to- (a) develop and produce the comrncn.:ia 1d iseovery of crude oil or natllrnl gas in the area to which the lease re lutes in accordance with the applicnble field development plan ; or (b) restart or continue petroleum production in the nrlJ'a to whic:h such !ease relates. (4) The Commission shall, during the Lcrrn of a petroleum mining lease,~ (c1) verify the implementation of the work commitments by the applic,1b!e lessee and its comp! iancc with the ,1pp lie ah le lie ld development plan: (b) monitor capital and operating costs incurred by the applicable Jessee ; and (c) ensure that upstream petroleum opcrntions at all times arc carried out to conform with the standards n::quin:d by Lhis Act and by regulation made tmder this Act. Confidentia- 83.-{ 1) A licensee or lessee shall for each petroleum prospecting lict•ncc lity. or petroleum mining lease provide a yearly summary of royalties, fees, taxes, profit oil shares and other payments to Government within six. months aner each calendar year to the Commission and the Minister of Finance through the Accountant-Genera 1of the rederalion and in case ofjoi nt ventures, where an operator makes payments to Government, the operntor shall provide the required information and where individunl holders of the licence or lease make such payment, the individual holders slrnll be responsible ror providing th..:- information and where 1,;011so!idation appl ics on n conso! idated basis. Petroleum J11dus11:i Act, 202 I 1 2021 No. 6 A 191 (2) The Commission sha I! define the required detn iI and c !ass ification of the summary under subsection { 1) And the stunmaries slrn 11 be no1Honfidential and published on the website of the Commission. (3) The text of any existing contract, licence or lcnse imd nny amendment or side letter with NNPC shall~ (a) not be confidential ; (b) be published on the website of the Commission within one year after the effective date ; and (c) be provided to the Commission by a contractor ofNNPC, licensee or lessee within one year after the effective date. (4) A contractor, licensee or lessee who does not or partially provides the Commission with the required information referred to in subsection (3), within the stipulated time contravenes the provisions of this Act and is liable to an administrative penalty of the sum of US $10,000 for every day the default subsists. (5) The text of any new licence, lease or contract or amendment to it shall not be confidential and shall be published by the Commission immediately following the granting or signing of such texts. ( 6) A licensee or lessee who obtained geological, geophysical, geochemical and other technical petroleum data during upstream petroleum operations as determined by the Commission shal I immediately provide the data to the National Data Repository of the Commission. (7) The data referred to in subsection (6) shal I not be confidential, except for- {a) trade secrets and proprietary information and other information as approved by the Commission : (b) the earlier of a period o I' five years or the period until the relinquishment date of the I icence area under sect ion 88 (I) and (2), with respect to exploration data including exploration and appraisal wells and geophysical surveys; (c) I Oyears for specific surveys carried out under section 7 ! (6) of this Act; and {d) such other infommtion for such periods as determined in the National Data Repository Regulation~. provided, however, that information re!nted to development \vel ls and oil and gas field product ion related data shall not be confidential. A 192 2021 No. 6 Petroleum !11dus11y Act, 2021 (8) Data in the National Data Repository of the Commission shnll be accessible to any interested person under such terms as may be determined by the Commission, provided, however, that the respective fees required for making non~confidentia I data a va ilab le shal I not exceed the reasonable cost or copying any data and a minimal hourly payment for the use of work stations. Power to 84.-( I) Un 1ess otherwise prohibited by this Act or regu Iat ion undcr this enter into Act, where the Minister grants a licence or !ease, a licensee or lessee may contracts. enter into a contract with a third party for the exploration, prospecting, production or development of crude oil qr natural gas or both. (2) The power to enter into contrncts under subsection (I) sha \l not confer on any licensee or lessee the right to assign an interest in any licence or lease, except in accordance with the provisions of this Act. Model 85.-( l) The Commission sha 11 develop a model Iicence and mode I !ease, contracts. which may contain an obligation to comply with fiscal obligations and other provisions related to fees. rents, royalties for such contract attached to or incorporated in the mode! licence or mode[ tease. (2) The model licence and mode! lease referred to under subsection ( ! ) shall comply with the provisions of this Act and may contain the following additional contractual provisions--------- (a) a production sharing contract for the exploration, development and production of petroleum on terms under which the financial risk-benring party shall recover costs from a share of production as established in the contract from the applicable area ; (b) a profit sharing contract which is a production sharing contrnct whereby the profit oil is provided in cash to Government ; (c) a risk service contract for the ex p!oration, development and production of petroleum on terms under which the financial risk~bearing party shall recover costs by a payment in cash or in kind from petroleum produced from the applicable area; (d) a concession agreement for ex.p Iara ti on, development and prod uet ion of petro le urn, which may in c Iude an incorporated or unincorporated j o i11 t venture with NNPC Limited ; and ( e) any contract being a vari at ion of the contracts under para graphs (a). (b) (c) or (d) or a contract which, at the time, is an internationally recognised form of contract for the exploration and production of petro 1eu m. (3) A licence or lease described under subsection (I) shall not be granted by the Minister unless the appropriate mode! contract is attached to the Iiccnce or lease as a guide 011 the relevant fiscal obligations. Pelroleum Industry Act, 2021 2021 No. 6 A 193 (4) A contract as provided fur under section 85 (2) {d) of this Act shall include a carried interest provision. whereby- (a) the Government through the NNPC Limited has the right to participate up to 60% in the contract or identified as a bid parameter; (b) the right to participate shall be from any time upon the granting of the licence or lease; (c) the contract shall stipulate that Government shall refu11d fully its proportionate share of the unrecovered proven costs from the date of its participation and such refunded cost shall relate to development and production and shall not include bonuses and penalties, interest, premium or markups on cost; ,., (d) the contract shaU not require any upfront payment by the Government~ (e) the nature, the validity and quantum of the unrecovered costs to be refunded shall be determined or verified by an agreed expert determination procedure; (f) the refund obligation under this subsection may be in the form of cash or kind from future share of production or entitlements from the effective participation date; and (g) the tenns, conditions and financial detai Is of any right of participation by the government under this subsection shall be contained in the model contract prepared by ,he coinmi ssion in consultation with NNPC Limited. ~ · ·•r -:r, 86.--( l ) A petroleum mining lease granted under sect ion 8 I of this Aet Duration 11ml shall be for a maximµtn-period of 20 years, which term shall :include the renewal or development period prescribed till d er SU bse<;tion ( 4 ). leases and licences. (2) Where a petrQl~um m·ining lease does·~~t initiate regular commercial production within the stipu!.a~ed deveiopment period p~escribed under subsection (4), the Commission shall recommend to the Minister to revoke the lease or license at the end of th~ stipulnted developrne'1it period. unless the lessee or licensee can provide to the Commission a valid reason that in the Commission's opinion is substantial, i~ _t.ihic h case the Co~m1ssi61~ shal I recommend to the Minister to extend the qevelopment period accordingly. }''7;". ':Jc. ·. (3) Where a petrol~rn mi;1ing lease is revoked under subsection (2), the applicable acreage sh'ail vest in the Goveniment and be controlled and administered by the Commission, which may be subject to a new petroleum mining lease granted in accordance with section 81 of this Act. (4) The development period for a petroleum mining lease granted under section 81 of this Act shall be the pedod established in the field development A 194 2021 No. 6 Petroleum Industry Act, 2021 plan under section 79 (2) (n) of this Act and where development period is not stipulated, the development period sha 11 be- ( a) five years for an onshore lease : and (b) seven years for a lease in shallow water or deep offshore or n lease in a frontier acreage. (5) Acreage in respect of an expired or revoked petroleum mining lease under this Act shall be subject to a new bidding process under section 73 of this Act where there is still commercial production possible, unless the term of the petroleum mining lease is extended under this Act. (6) A petroleum mining lease which continues to produce in paying quantities may be renewed by the Commission in accordance with section 87 of this A et for one or more sue cess ive add it iona I le rms, of not more than 2 0 years each, provided that- (a) the field continues to produce in paying quantities~ a11d (b) all rents, royalties, taxes and other applicable fiscal obligations stipulated under this Act shall continue, subject to section 87 of this Act. (7) A petroleum mining lease which ceases to produce in payi11g quantities for a period of not less than I 80 days may, except for force mqjeure or any other reason acceptable to the Commission, be revoked by the Commissio11. (8) A lessee of a petroleum mining lease who intends to suspend production for more than 180 days and to resume production at a later dntc, shall submit to the Commission a specific shut-in plan and a commitment to restart production in accordance with the shut-in plan. Conditions 87.---(I) A lessee of a petroleum mining lease may, not less thmi 12 rorrenewal months before the expirntion of the lease. apply in writing to the Commission nr for a renewal, of leased area or any part of it. petroleum mining (2) A petroleum mining lease shall be renewed by the Commission where leases. it is satisfied that the lessee- (a) has fu lfi Iled its ob Iigations relating to the development of the lease area; (b) has fully met all payments requirement tmder this Act or any other enactment in respect of royalties, rents, taxes and fees relating to the petroleum mining lease; ( c) is not in defa u It of any ob Ii gation or condition relating to the lease ; and (c{) has discharged all operational ob!igc1tions in compliance with applicable rules and regulations. Petroleum I11d11s11:y Ac/, 2021 2021 No. 6 A 19:i (3) The renewal referred to under subsectio1i (2) shall be on terms nnd conditions determined by the Cummission and the lessee s!wl! pay a renewal bonus of an amount sped fied by the Commission biiscd on tile percentage or Lh c market value Oil the ren ewa I cl atc prescribed in the reg u IaIi on made uncle r this Act. ( 4) The Commission may. in pub Ile interest. change. impose or add new lease conditions, which shall be published in the Feckrnl Government Ga::elle. 88.---( 1) Prior to the expiration of the initial c.xplorntion period of three Relinquish- years or of the optional extension period of three yenrs under section 77 ( l) of mcni. this Act, a licensee shall relinquish e-very area that is not an nppraisal area, retention area or lease area based on parcels or sub~purecl under section 69 ofthisAct. (2) Prior to the expiration ol'the initial exploration period of five years or of the optional extension period of five years under section 77 (2) of this Act, a licensee shall relinquish every area that is not an appraisal area, retention ,1rea or lease area on parce 1or sub-parcel under sect ion 69 or this Act. (3) Every appra isa! area or retention area sha!l be retained as prov icled for under this Act and where one or more declarations or a commercial discovery have been made, the petroleum prospecting licence shall be extended until all related petroleum mining teases have been granted or denied. (4)A licensee ofa petroleum prospecting licence may voluntarily relinquish parcels and sub-parcels under section 69 of Lh is Act, provided that the - (a) licensee has complied with the obligation in the petroleum prospecting licence ; and (b) shape of a relinquished block shull be approved by the Commission to maintain acreage of shape that is viable for award in a future licensing round. (5) After 10 years of the commencement of a petroleum mining lease~ (a) the applicable lessee slrnll relinquish all pnrcc!s which do not rail within the boundary of a producing field under thi,; Act; and (b) any formation deeper than the deepest producing formation shall be relinquished, and the deep rights shall vest in the Government. (6) Upon the expiration of any significant gas discovery retention period in respect of a petroleum prospecting licence, every area relating to the s igniricant gas discovery retention area shal I be re! inqu ishcd, unless the applicable licensee has declared a commercial discovery in such significont gas discovery retention area. A 196 2021 No. 6 I'elroleum !11dust1J' Act, 202 l · (7) An area or zone relinquished under this section, shall be vested in the Government and administered by the Commission and the relinquishrncnls sha!l be in a north-south, east-west direction and defined in a rectangular or square shaped compact unit. (8) Any rent paid in respect of an area or zone that is rcli nqu ished under this section shall not be refundable and such relinquishment shall be without prejudice to any obligntion or liability imposed by or incurred under th9 applicable licence or lease. (9) Where the deep rights have been relinquished and subsequently granted to a tb ird party u ndcr subsection {5) ( b ), I he Commission sha !l cns ure that the licensees or lessees of the overlapping petroleum rights shall enlcr into a cooperation protocol based on good international petroleum industry practices, dealing with matters such as non-interference measures. location of wells, constrnction of gathering lint:s, unauthorised production from reservoirs, notice of dangerous operations, joint emergency response, joint use of certain fac iI it ies and pipe! ines. Iand and water rights and sue h other matters as the Comm iss ion deems required for optimal petro \eum operations pursuant to regulations. Surn.::m!cr 89...----( 1) Not withstanding the prov isinns or 1h is Act on relinqu ishmcnt, n urlie,.::nce or kasi:. holder of a petro 1eu m prospect i11 g l icencc, pet ro Icum exp! oration Ii ce nee or petroleum mining lease may surrender pa rL or the whole of the Ii cenccd or leased area, provided that the licensee or lessee has~ (a) complied with obligations imposed by or incurred under the applicabk: licence or lease ; and (b) given three months' notice in writing to the Commission prior to the surrender, (2) Any rent or fee pa id prior to a su rre ndcr 11 nder subsection ( l } sha l! not be refondable and the licence or lease surrendered shall be without prejudice to any obligation or liability imposed by or incurred under the applicable Iicence or lease. Rights of 90. Subject to appli.cab!e law, terms and conditions prescribed by the 11a~ rdating Commission, a holderdn petroleqm prospecting li-:cnce, petroleum exploration 11pstr,.::am !(1 Iicence or petroleum mining lease is ·entitled with the approval of the Commission pctrnkum operations. to rights of way for the laying, operation and maintenance of gathering lines, telephone 1ines, power Ii nes and other similar Ii ncs through or across the arcns the holder may require. Petroleum /Ju/11stq Act, 2021 2021 No. 6 A 197

91.-(l) Subject to subsection (2), the Commission mny preserve in Rights ul' accordnnce with appl icuble law, u right of way, casement or other right over \I ayr,:s,:n ,·d for 1h,: an aren to which a petroleum prospecting licence, u petroleum exploration Commb,iu11. licence or a petroleum mining lease, which the Commission considers uecessary for the laying, operation und mainie1rn11cc of pipcl ines, telepk1ne Iines and power lines and any right of way or other righ l rese rvcd slm 11 continue for the benefit of any person Lo whom the Commission mny subsequently grant the same. (2) Where a holder of a petroleum prospecting l iccnce, petroleum exploration licence or petroleum mining lease is oft he opinion that a reservation made by the Commission under subsection (I) affects Lhe health, safety or environment of a person, the licensee or lessee may object to Lhe reservation in writing and the Commission shall reconsider the rcs,:rv,ition in light of the objection. (3) The holder of a petroleum prospecting licence, a petroleum exploration Iice nee or a petroleum mi 11 ing Iease sha !l- (a) be entitled to enter and remain on the land that is the subject of the !ice nee or lease and do such things that are not prohibited by applicable law or under the licence or lease ; and (b) comply with applicable law relating to town or country p!ann ing or reg~dating the construction, alteration, repair or demo Iition of bui !d ings, or providing for similar matters, which relates to the c.irryi ng 0111 of operations authorised by the licence or lease.

92.-(1) A holder of an existing oil prospecting licence or oil mining Vnlonlary lease may enter into a voluntary conversion contract under this Act. con1 crsitin ul'mi oil (2) A licensee or lessee under n conversion contract shull benefit from prospc,: Ii ng the fiscal provisions under Chapter 4 of this Act, where the licensee or lessee licence to H complies with the provisions of this Act. p,:trolcu111 prospcc Ii ng (3) The conversion contract shall contnin a termination clause or all lic,:m:e or nil outstanding arbitration and court cases related to the respective oi I prospecting mining k:i~c 1D pc1mlcum licence or oil mining.lease and- mining lcuse, (a) any stability provisions or guarantees provided by NNPC in respect of oi ! prospecting licences or oi I mining le;ises to bc converted shal [ be 11 uII and void; and (b) the incentive provisions contained in sections ! 1 m1d 12 of the Cup. !'1,1. Petroleum Profit Tax Act shall not apply. LFN. 200-1. A 198 2021 No. 6 Petroleum Iml11s11y Act, 2021 ( 4) A conversion contract shall be concluc.h:d at a date c·cmwers ilm date") which is the earl icr o t'.--- (a) 18 months from the effective date; nnd (b) the expirnt ion date of lhc o i[ mining lease oi" date oft :.mvcrsic•n \.l r l he oi [ prospecting l itencc lo nn oi [ mining lease. (5) Prior to the conversion date, the terms applicable to th ~ oi! prospccl ing licence or oil mining !case prior lo the effective date shall continue to apply. ( 6) Where a holder of an existing. oi 1 prospecting 1icell';c or oil mini 11g lease does not enter in!o a convcrsio:1 contract prior to the conversion d:1tc, the tenns and con cl it ions a pp! icab Ic to the oil prospecting !icence or o iI mi 11 i11 g lease prior to the effective dme of this Act shnll continue to apply to the oil prospecting Iicence or oil mining lease. su bj eel Lo sections l 24 (2). 125 ( 6 ). or 174 (6), 303 ( l) and 31 l (2) (h) this /\et. (7) Where an oil prospecting licence is rnnvcrted, thJ terrn ol' yenrs included in such l iccncc shall apply to the converted petroleum prospect i11g licence. lt~linqt1ish- 93. ( 1) A holder of oil mining lease, including oil mining lense that is rncnt upon subject to productio11 sharing. contract, shn Il at the rcnev,·a! dr.te app l icnble Lu n:1\~\H\] 01' the oil mining lease or at Lhe conversion date, desig1rnte each area and Ltlne 01· V(lll\L'l·sion ()ran oil the oil mining lease as areas nnct zoncs- n1ining k:1s~. (a) which, in the opinion oflhe holder, merit appraisal ind' for which the bolder of the oi I 111 ini 11g le,1se is prepared to present an appraisa t progrnm under section 78 or this Act: (b) in respect of \vh ich the holder is prepared to make a dee larn! ion nf" a commercial discovery under section 78 of this Act and submit a field development plan Lo the Commission under section 7') or this /\et; (c) in respect of which the holder is prepared to make n declaration 01· a significant gas discovc1y or ,1 signi ticrn1l crude oi I discovc ..y under sect ion 78 of this Act and submit nn appl i:;ati,m for npprova I of a retention arcn : (d) in respect of \~hich development of a !ield is und .:rway based 011 prior approvals a!ier having dee lrrcd t l1t;' discovery co1:rnerc in I or i r 110 such declaration wns made after having made n final investmenL decision to develop the field : nnd (e) in respect of which regular commert:inl production is occurring. (2) Where the tot<1I ncrem.'..e selected under subsection ( l) is less lhan 40% of the area to \vhich the applicable t)il mining lease applies, lhc holder 1nay select additional areas covered by the oil mining !ease for conversion to .i petroleum prospecting Ii cencc in such a 11rn1111er that the total of ,t!l areas selected Petro{e11111 bulus/ry Acl, 202 l 2021 No. 6 A 199 shall not be more than 40% of the o i I mining lease area and where the total acreage selected under subsection (I) is more than 40%, the holder shall be entitled to keep such larger area, consisting solely of the selected areas. (3) Any selected area under subsection (2) shall be bnsed on parcels. (4) Areas and zones subject to an oil mining lease nnd not selected by the holder under subsections ( I ) and (2) slrn 11 be re lin q u ishcd by the holder. (5) The relinquishment date for the purpose of subsection ( 4) shall be the renewal date or where the holder of the oil mining lease dee ides to convert under section 92 ( I) of this Act, the conversion date. (6) Subject to section 94 of this Act on the applicable relinquishment date, the Commission shall convert the applicable oi! mining lease in respect of each area and zone- (a) designated by a holder u11der subsection (I) (a). (h), (c) or (2) into a petroleum prospecting licence in accordance with section 78 of this Act, with fiscal terms as applicable under section 267 (h) and other terms of Chapter 4 of this Act for new acreage and with the relinquishment date being the effective date for such petroleum prospecting licence; and (b) selected under subsection(!) (d) and {e). into petroleum mining leases, with fiscal terms as applicable under section 267 (a) and other terms of Chapter 4 of this Act_ to the lease, provided that, for- (i) production sharing contracts for the determination of the profit oil sliding scale based on ctiniu !i1tive production, the to Lal production from all petroleum mining l~as~s~s\rnll be applicable, and (ii) royalty purpose, the production of each petroleum mining lease shall be the basis. (7) Where a licensee of an oil prospecting licence, including any oil prospecting licence that is subject ton production sharing contract, voluntarily opts to convert its licence to a petroleum prospecting licence under section 92 of this Act, it shall select as provided in subsection ( 1) the areas and zones indicated in this subsection lipon the conversion dlltc and the Commission shall convert the applicable oil prospecting licence oft he areas and zones- (a) designated by a holder under section 93 (!}(a), (h) and (c) of this Act as areas to be continued under the petroleum prospecting Iicence under this Act, with fiscal terms as applicable under section 267 (h) and other tem1s under Chapter 4 of this Act for new acreage; (b) selected under section 93 (I) (d) and (e) of this Act shall be converted into petroleum mining leases with fiscal terms ns npp!icablc under section 267 (a) and other terms of Chapter 4 o fthis Act, npp licablc to these lenses, provided that- A 200 2021 No. 6 Petroleum Jndus!ry Acl, 2021 U) with respect to production sharing contracts for the determinntion of the profit oil sliding scale based on cumulative production. the total production from all petroleum mining.leases shall be applicable, and (ii) for royalty purposes, the production of each petroleum mining lease shall be the basis ; and (c) the remaining area shall coi1tinue as exploration area under the petroleum prospccti ng Iice nee, with fisca I tcmis as applicable under Chapter 4 of this Act for new acreage. (8) With respect to existing oil mining k:nscs where NNPC held vested rights to natural gas prior to the effective date of the Act, under a conversion pursuant to subsection (6) (a) and (b), NNPC Limited shall retain these rights and where NNPC Limited relinquishes such rights, the conversion contract under section 92 ( 1) of this Act, shall include a consideration to NNPC Limited for the market va I ue of the rights re I inq tl ished. Marginal 94.-( I) A producing marginal field shall be allowed to continue to lkltl. operate under the original royalty rates and farm out agreements, but shall convert to a petroleum mining lease under this Act, with terms applicable under sections 2 6 7 (b ), 3 02, and other provisions under the Aet within l 8 months from the effective date. (2) A discovery declared as a margina 1field prior to 1st J anuury, .Z021 and is not producing shall be converted to petroleum prospecting! icence and shall benefit from the terms for new acreage under Chapter 4 of this Act. (3) Where the discovery has been transferred to Government. the Commission is entitled to offer the petroleum prospecting licence in a bid round under section 74 of this Act. (4) Within three years of the effective date. any marginal field that has not been transferred to Gov ernmcn t, sha !l be subject to the fa 11 owing proccss and the ho !der of the o i! mining lease- (a) present a field development plan for the marginal field ; (b) with the consent of the Commission and on terms and conditions as the Commission may approve under regulations, farm out the discovery; or (c) relinquish the field in accordance with the provisions of this Act. (5) The consent of the Commission to the farm-out of a marginal fie kl under subsection ( 4) (h) shall, amongst others, be subject to the farmee presenting a field development plan over a period of time agreed with the Commission and a regulation made under this Act. · . Petroleum Industry Act, 2021 2021 No. 6 A201 (6) The failure to present a field development plan tmder section 94 (4) (a) of this Act or within the time frame specified under section 94 (5) of this Act shall require the relinquishment of the marginal field. (7) A marginal field relinquished under subsection (4) (c) or(6) shall be vested in the Government and be administered by the Commission. (8) For the purpose of this section- (a) ·'marginalfield'' means a field or discovery which has been declared a marginal field prior to I st January 202 I or which has been lying fa 1!ow without activity for seven years after its discovery prior to the effective d~e;~d · (b) "farm-out" means an agreement between the holder of a petroleum mining lease or petroleum prospecting licence and a third party, which permits the third party to explore, prospect, win, work and carry away any petroleum encountered in a Iicence or lease area during the va Iid ity of the licence or lease. (9) No new marginal fields shall be declared under this Act. 95.--{ 1) A holder of a petroleum prospecting Iicence or petroleum mining Assignments. lease shall not assign, novate or transfer his licence or lease or any right, m\C'rgers. trnnsfrrs power or interest, or a shareholder of an incorporated joint venture sha 11 not and sell or transfer its shares without prior written consent of the Minister. acquisitions. (2) The consent of the Min Ister under subsection ( l ) shall be granted upon the recommendation of the Commission. (3) For the purpose of subsection ( 1), a change of control in the holder of a Iice nee or lease under subsection ( I ) shal I be deemed to be an assignment. (4) A Iicensee or lessee wishing to assign, novate or otherwise transfer its interest, or a shareholder of an [ncorporated joint venture wishing to sel I or transfer its shares under subsection ( l ), shall make an application for approval of the transfer to the Commission in the fonnat prescribed by the Commission, and be accompanied with any other information that may be pursuant to any regulations published by the Commission. ( 5) Notwithstanding the provisions ofsubsection ( I), a holder of a Iicence or lease may by way of security, wholly or partly assign, pledge, mortgage, charge or hypothecate its interests under the applicable licence, lease or grant a security interest in respect of the interest, provided that the consent of the Commission shall be obtained. A 202 2021 No. 6 Petroleum Industry Act, 2021 (6) The Commission shall within 60 days of the receipt, act on the application of the licensee or lessee under subsection (4) and on the request for consent under subsection (5) and the consent of the Commission with respect to subsection (5) shall not be unreasonably withheld. (7) Within 60 days ofthe receipt of the recommendation ofthe Commission under subsection ( 4), the Minister sha II consider it for approval, sue h approval not to be unreasonably withheld, and where-- (a) the Minister rejects the recommendation of the Commission, the Minister shall provide the reason for such rejection ; and (b) no response on the application has been received within 60 working days from the receipt of the recommendation of the Commission, theconsenl of the Minister under subsection ( 1) shall be deemed to have been granted. (8) Where the consent of the Minister is granted in respect of the application for a transfer, the Commission shal I promptly record the transfer in the appropriate register. (9) The Commission shall communicate the refusal or approval of an application for an assignment, novation or trahsfer of a licence or lease in writing to the app Iicant. ( l 0) Where the application for an assignment or a transfer of a petroleum prospecting licence or petroleum mining lease is refused, the Commission shall infonn the applicant ofthe reasons for the refusal and may give reasonable time within which further representations may be made by the applicant or by third parties in respect of the application. (l l)The Minister may grant consent toan assignment, novation or transfer of a petroleum prospecting licence or petroleum mining lease, subject to the following terms and conditions which the Commission may consider appropriate, that the proposed transferee- (a) is a company incorporated in Nigeria; (b) is of good reputation and standing; (c) has sufficient tech11ical knowledge, experience and financial resources to enable it effectively carry out all responsibilities of a licensee or lessee under the licence or lease; and Act No I. (d) shal! comply with the Federal Competition and Consumer Protection

2018. Act. ( 12) The Commission shall make regulation to prescribe for payment of fees as a condition for any transaction under subsection ( 1), which fee shn !I be based on a percentage of the value of the transaction and shal! not be tax deductible. Petroleum Industry Act, 202 J 2021 No. 6 A 203 ( J3) The consummation and details of any transaction to which subsection (I) applies shall be- (a) fully disclosed to the Federal Inland Revenue Service by the parties to the transaction ; and (b) published in the Federal Government Gazelle by the Commission. (14) For the purpose of this section, "change of control" means any person or persons acting jointly or in concert, to acquire direct or indirect beneficial ownership of a percentage of the voting power of the outstanding voting securities of the holder, by contract or otherwise, that exceeds 50% at any time. ( l 5) A holder of a petroleum exptoration licence shall not assign, novate or transfer his licence or any right,. power or interest without prior written consent of the Commission. 96.--{l) Upon receipt of the written recommendation of the Commission Grountb for for revocation, the Minister may revoke a petroleum prospecting licence or rc\'OCation (lr licence or petroleum mii1ing lease, where the applicable licensee or tessee-- lcaSt::. (a) fails to conduct petroleum operations in accordance with good international petroleum ind us try practices, the provisions of this A et and any other relevant legislation ; ( b) interrupts production for a period of over 180 consecutive days without justification or as provided for in the applicable licence, lease or approved fie Id development plan, provided that an event of force majcure shal I be an acceptable justification for interruption; (c) fails to fulfil the terms and conditions of the applicable licence or lease or the approved field development plan; (cl) fails to pay to Government, as they become due, rents, royalties, taxes or other payments or production shares under this Act ; (e) fails to furnish any reports or data on operations as required by law after having been advised in writing by the Commissiori of such failure; (/) assigns, novates or otherwise transfers any interest in the applicable licence or !ease other than in accordance with section 95 of this Act; (g) has obtained an interest, in the applicable licence or lease based on false representation or contrary to corrupt practices and money laundering !aws; (h) is declared by a court of competent jurisdiction to be insolvent, bankrnpt or is liquidated, in each case except as part of a solvent plan or scheme ofre-organisation, amalgamation or arrangement; A 204 2021 No. 6 Perroleum Industry Act, 2021 (i) has failed to comply with environmental obligations required by applicable law or by the provisions of the applicable licence or lease; (i) is owned wholly or in part, directly or indirectly or is controlled by a former or serving public official or member of the Government, who obtained his interest in the applicable licence or lease other than as permitted by applicabie law; (k) does not submit and advance a field development plan and work commitment under sections 78 and 79 of this Act; (l) fails to abide by any expert determination, arbitration award or judgment arising from the dispute resolution provisions set forth in a licence, lease or this Act ; (111) fails to comply with domestic crude oi I supply or domestic gas de Iivery obligations under this Act and any subsidiary regulation; or {n) fails to comply with the host communities obligations under this Act. (2) Subsection (1) (t) shall apply to a former public official or member of Government only where the applicable interest was acquired while the public official was in office or was a member of the Government. Notice 97 .-( l) Prior to the revocation of a petroleum prospecting licence or of default petroleum mining lease by the Minister under section 96 of this Act, the prior to Commission shalI- revocation. (a) serve a notice of default on the applicable licensee or lessee stating the grounds upon which the Commission may recommend a revocation of the licence or lease to the Minister; and ( b) provide the Iicensee or lessee with a remed iation period of not less than 60 days within which to remedy the default. (2) Where the Commission is satisfied with the remedy provided by the licensee or lessee under subsection ( 1) (b ), the revocation process shall terminate. (3) Where, at expiration of the remcdiation period provided under subsection (I) (b), the default persist, the licence or lease may subject to the provisions of section 99 of this Act, be revoked in accordance with section 96 of this Act. (4) A notice of default shall be- (a) sent by the Commission to the last known address of the licensee or lessee or its legal representative in Nigeria, or (b) published in the Federal Govemment Gazelle or on the website of the Commission, Petroleum Industry Act, 2021 2021 No. 6 A205 each of which shall constitute sufficient notice to the licensee or lessee of the notice of default. (5) Revocation of a petroleum prospecting licence or petroleum mining lease shall be without prejudice tc any- (a) liability or obligation which the licensee or lessee may have incurred in favour of the Commission, the Government or any third party ; or (b) claim, which the Commission, the Federal Government or any third party may make against the licensee or lessee. ( 6) A revocation decision shall be pub I ished in the Federal Government Gazelte and the Commission shall amend relevant registers maintained by it to reflect the revocation.

98.-( I) Within 30 days of the revocation of a petroleum mining lease Administmlion or participating or shareholder interest in a petroleum mining lease which is ofa rcrnkcd producing producing, the Minister may, on the recommendation c:ifthe Commission, appoint lease. an interim operator to ensure petroleum operations continue from the areas and zones subject to the petroleum mining lease based on good international petroleum industry practices. (2) The interim operator appointed under subsection (I) shal I serve for a period to be determined by the Commission and the related contract shal I be on a service fee basis. (3) During the tenure ofan interim operator, the Commission may conduct a fair, transparent and competitive bidding process for the grant of a new petroleum mining lease to replace the revoked petroleum mining lease.

99.-( I) Where two or more persons are holders of a petroleum Po,,cr oJ prospecting licence or petroleum mining lease and one or more of the rc,ocalion of pm1idpaling grounds for revocation set forth in section 96 of this Act applies to not al I Of of the holders, the Minister- slmrcholtlcrs (a) may, in accordance with section 96 of this Act, revoke the interest. participating or shareholders interest of the holder or holders to which the grounds apply; and ( b) shall not revoke the interests of the other holder or ho Iders to which the grounds do not apply. (2) A holder to which the. grounds apply under subsection (1) (a) is referred to as a "defaulting holder'" and a holder to which the grounds do not apply under subsection (1) (b) is referred to as a ''non·defoulting holder". A 206 2021 No. 6 Pelroleum J11dus1r.v Acl, 2021 (3) Upon a revocation of an interest under subsection (I) (a), the rights of the defaulting holder shall cease without prejudice to any obligation or liability incurred or imposed on the defaulting holder under the terms and conditions of the licence or lease prior to the time of the revocation. (4) The interests of each non-defaulting holder shall not be af'fectcd by a revocation of the interest under subsection ( !) (b) and the non-defaulting holders shall take such measures as provided for under the joint operating agreement or shareholder agreement to redistribute the revoked part1cipal ing or shareholder interest to the non-defa u Iting ho Iders or third parties. ( 5) Where subsection (I) app Iies, an assignment to a third party may require the approvals stcpulated under this Act and any replacement of the wi operator 11 require the approva I of the Commission, (6) The Minister may revoke a licence or lease, where a non-defaulting holder under subsection ( I ) ( b), fa iIs to-- (o) take responsibi Ii ty for the payment of rents. royalties, ta'\es, product ion shares, profit shares or other contract1m1 payments to Government of the defaulting holder under the licence or lease; or (b) comply with any other obligation under the licence or lease i1f a mannertliat may result in the revocation of the licence or lease under section 96 of this Act. Fees. 100.-{ 1) A holder of a petroleum prospecting licence or petroleum royalties. mining lease shall pay to the Government royalties, fees, rents and production rents and or profit shares in the amount and time as prescribed in the licence or lease other payments to under this Act and regulations made by the Commission. Government. (2) Where royalties, fees, rents, production or profit shares or other required payment to Government due under this section remnins unpaid !or a period of 30 days after tl1e date when it becomes due for payment, it shall be considered as a debt to the Corn miss ion with interest accrn in g at a p rev a i Ii n g Central Bank of Nigeria (CBN) rate to be provided for in a regulation issued by the Commission. l ·. · (3) The Commission may, after the 30 days period referred to under subsection (2) and until the debt is repaid, together with accrued and unpaid interest- (o) enter into and upon any land, properly or premises owned, possessed or occupied by the holder of the licence or lease; (b) seize, distrain and sell any petroleum. petroleum products, engines, machinery, tools, implements or other effects belonging to the holder of the licence or lease, and the costs incurred by the Commission in connection with the seizure, distress and sale shal! be added to the debt; and Petroleum Indmtry Act, 2021 2021 No. 6 A 207 (c) out of money arising from the sale of any item referred to in paragraph (b), pay off the debt and any surplus slmll be paid by the Commission to the ho!der of the licence or !ease. (4) Payment to Government referred to under this section shall not be waived or discounted. (5) Nothing in this section shal I be interpreted as to reduce or amend the provisions of section 96 (I) (d) of this Act.

101.-( I) A licensee or lessee shal ! not enter upon, occupy or Danrngc lo exercise any of the rights or powers conferred by iIs [icence or Iease in prutct.:tcd and relation to any- 1 cncra1ctl (a) area held to be sacred, the question as to whether the area is sacred or objccb. not shall be decided by the customary court of the area, where necessary; (b) part of the following relevant areas, except it obtains a written permission from and subject to conditions as mny be imposed by the Commission, any part- (i) set apart for, used or appropriated or dedicntcd to public purposes, (ii) occupied for the purposes of the Government of the Federation or a State, (iii) situate with in a township, town, village, market, burial ground or cemetery, (iv) which is the site of or is within 50 yards ofnny building, installation, water reservoir, dam, public road or tramway or which is appropriated for or situate within I 00 metres of any rai !way, or ( v) of the land undei' c uIt ivation ; {c) any part consisting of privately owned or !egnlly occupied !and other than private land falling under paragraph (b) except perm issio11 in writing to do so has been obtained by the licensee or lessee from the Commission, which may grant permission if the licensee or lessee has- (i) given previous notice in writing to the Commission specifying by name or other sufftcient designntion and by quantity, the lnnd proposed to be occupied and the purpose for which it is required, and (ii) paid or tendered to the person in lawfu 1occupation or the owner or owners of the land fair and adequate compensntion; and (d) dispute under paragraph {c) as to who is in lawful occupation or the owner of any land or as to the amount of any compensation payable, the licensee or lessee, pending the determination of the dispute, shall deposit with the Federal High Court, with jurisdiction over1he matter, such sum as A 208 2021 No. 6 Petroleum lndushJ' Acl, 202 l shall be detennined by the Federal High Court to be reasonable compensation payable to the rightful owner or occupier of the land, having due rcgnrd to the existing regulatory framework. (2) A person shall not, in the course of petroleum operations- (a) injure or destroy any tree or object which is~ (i) of commercial value, or (ii) the object of veneration to the people resident within the licence or lease area ; (b) damage or destroy any building or prope11Y; or (c) disturb or damage the surface of the land or any other rights to any person who m.vns or is in lawful occup.1tion of the surface area covered by the licence or lease. (3) A licensee or lessee who causes damage under subsection {2) shall pay fair a:1d adequate compensation to the persons or communities directly affected by the damage or injury. ( 4) The amount of compensation payable under subsections ( l) (c) (U) and (3) shall be determined by the Commission and prescribed by regulation made under this Act. (5) Where a licensee or lessee fails to pay compensation as prescribed under subsection (4) within 30 days, the Commission may apply sanctions in accordance with regulations made under this Act. En\'ironmental 102.4 l ) A Iicensee or lessee who engages in upstream and n I id stream management. petroleum operations shal I within- ( a) one year of the effective date, or (b) six months after the· grant of the applicable licence or lease, submit for approval an environmental management plan in respect of projects which require environmental impact assessment to the Commission or Authority, as the case may be. (2) The environmental management plan under subsection ( I} sha 11 be in accordance with the extant Acts. (3) The Commission or Authority, as the case may be, shall approve the environmental management plan, where- (a) it complies with relevant environ mental Acts ; and (b) the applicant has the capacity or has provided for the capacity to rehabilitate and manage negative impacts on the environment. Petroleum Industry Act, 202 ! 2021 No. 6 A 209 (4) The Commission or Authority, as the case may be, sha !I in considering the environmental management p!an, take into account the policy thrust of the Government regarding environmental protection and management practices. (5) The Commission or Authority, as the case may be, may request for additional information from the licensee or lessee .ind may direct that the environmental management plan be adjusted in a manner the Commission or Authority may require. (6) The Commission or Authority, as the case may be, may after its approval of an environmental management plan and af'ter engagement with the operator of a Iicence or Iease, ea! l for an amendment of th c en v ironmenta 1 management p!an. (7) Chemicals shall not be utmsed for upstream petroleum operations, except the Commission grants an applicable permit and approval. 103,-----( I) As a condition for the grant of a I icence or lease and prior to Fimmcial the approval of the environmental management plan by the Commission or cuntri hlll i011 Authority, a licensee or lessee shall pay a.prescribed financial contribution to llir n.:mcdiitliun ·an environmental remed iation fund established by the Con1111 iss ion or Authority, of as the case may be, for the rehabilitation or management of negative <.:m imnmcmnt environmental impacts with respect to the licence or lease. dmnng<.:. (2) In determining the amount of the financial contribution, the Commission or Authority as the case may be, shall take into consideration the size of the operations and the level of environmental risk that may exist (3) The financial contribution to an environmental remed iation fund under subsection (l) shall be subject to audit by the licensee or lessee, in accordam;e with guidelines that the Commission or Authority may, as the case may be, issue. (4) Where Ii censee or lessee fa iIs to rehab iI itate or manage or is una bIe to undertake the rehabi !itation or management of any negative impact on the environment, the Commission or Authority, as the case may be, may, upon written notice to the holder, apply the fund under subsection (!)to rehab ii itate or manage the negative environmental impact. (5) A licensee or lessee shall. under subsections ( t) and (2) assess its environmental liabi! ity annua!ly and increase its financ ia! contribution to the satisfaction of the Commission or Authority, as the case may be. (6) Where the Commission or Authority, as the case may be, is not satisfied with the assessment and financial contribution referred to in this section, the Commission or Authority, as the case mny be, may appoint an independent assessor to condl!ct the assessment and determine the financial contribution. A 210 2021 No. 6 Petroleum lndus/JJ' Ac/, 2021 Gas flaring 104.-{l) A licensee, lessee or marginal field operator that llnr~s or penalties. vents natural gas, except- (a) in the case of an emergency, (b} pursuant to an exemption granted by the Commission, or (c) as an acceptable safety practice under established regulations, commits an offence under this Act a!'1d is Iiable to a fine as prescribed by the Commission in regulations under this Act. (2) A fine due under this section shall be paid in the same manner and be subject to the same procedure for the payment of royalties to the Government by companies engaged i11 the production of petroleum. (3) A fine paid under this section shall not be eligible for cost recovery or be tax deductible. (4) Money received from gas flaring penalties by the Commission under be this section, shall for the purpose of environmental remed iation and rcl ie f of the host communities of the settlors on which the penalties are levied. Prohibition 105,-( l) A Ii cen see or Iessee sha 11 pay a pc na Ity prescribed pu rs ua n I ol'flaring or to the Flare Gas (Prevention of Waste and Pollution) Regulations. \Cntingof nntural gas. (2) The Commission shall have the right to take free of cht1rgc natural gas that is destined for flaring at the flare stack. Measurement 106.-( l) A licensee shall, prior to the commencement of pctrokum offlared production, install metering equipment conforming to the specific.itions natural gas. prescribed on every facility from which natural gas may be nared or-vented as the Commission or the Authority may prescribe in a regulation. (2) A licensee or lessee who fails or refuses to install metering equipment under subsection (I) comm its an offence and is liable to a fine as the Commission or the Authori1)' may prescribe under a regulation. Exemption. 107. The Commission or the Authority may grant a permit to a Iiccnscc or lessee to allow the flaring or venting of natural gas for a specific pcriod- (a) where it is required for facility start-up; or (b} for Strategic ope rationa I reasons, in cl ud i11 g testing. Natunilgas 108. Notwithstanding any provision to the contrary under this Acl, n Oare licensee or lessee producing natural gas shal I. within 12 months of the c ncct iw elimination date, submit a natural gas flare elimination and monetisation plan to the plan. Commission, which shall be prepared in accordance with regulations n1,1dc by the Commission under this Act. Petroleum J11dus1ry Act, 2021 2021 No. 6 A 211 109.--{ l) The supply of crndc oil and condensates for the domestic l)rnm:~tic market shall, subject to subsection (2), be on a willing supplier and willing .:rmkoil suppl~ buyer basis. oh 1ig,11i1111:;. (2) The Commission may issue regulations or guidelines on the mechanism for the imposition of a domestic cmde oil supply ob Iigat ion on lessees of upstn.>am petroleum operations, including applicable penalties. (3) The Authority shall supply the Commission on a regular basis the crude oil requirements of refineries in operation and where shortages or inadequate supply conditions occur report such conditions to the Commission. (4) The Commission shall ensure that the domestic crude oil supply obligation contains the following, that- (a) crude oil may only be sold to holders of crude oi I rclin ing licences, whose refineries are in operation; (b) the supply of crude oil shall be commercially negotiated between the lessee and the crude oil refining licensee, having regard lo the prevailing international market price for s im iIar grades of c rn de o iI ; and (c) holders of crude o iI refining licences sha II provide payment guarantees as required by the applicable Jessee, and payment for cmdc oil pmchased pursi,iant to obligations shall be in US dollars or Nairn, as may be agreed between the lessees or suppliers and the licensee orthc relining licence.

110.-(l) Subject to subsections (2) and (4), the Commission shall, by a Don11:.,1k regulation or guideline made under this Act,- g,i::- tkl i, ;;r) ohl ig:11 i1111,. (a) prescribe and allocate the domestic gas delivery obligation 'among all lessees before 1st March of each year based 011 the domestic gas demand requirements determined or updated under section 173 or this Act; and (b) ensure compliance by evei-y lessee of the domestic gas delivery obligation. (2) A lessee may, on a voluntary basis, conclude conlracts with wholesale customers of the strategic sectors or with wholesale gus suppliers supplying the strategic sectors for delivery of marketable natural gas on a free markcl ha sis to these customers or suppliers and notify the Commission of the con tracts and where the volume of the contracts is equal to or higher than the domestic gas delivery obligation for the lessee, the lessee shnll- (a) be deemed to have fulfilled its domestic gas delivery obligation: (b) not be a producer client of the gas aggregator ; and (c) inform the gas aggregator. A 212 2021 No. 6 Pe1role11111 lndusll'.J' Act, 202 l (3) A lessee who has corn pi ied with its domestic gas <lei ivery obligut ion or may wish to supply wholesale customers who nre not part of the strategic sectors may deliver further supplies of marketable natural gas to the dornestk market on a wi Iling sel !er and wi 11 ing buyer basis. (4) A wholesale gassupp!iermay, on a voluntary basis and following the procedure stipuiated under subsection (2)-- (a) enter into a contract with a lessee or wholesale custo111er of the strategic sectors for the de! ivery or marketable na turn I gns f() the customers ; and (b) inform the Commission and Authority or the contrncts. (5) The Commission shall require a lessee producing natural gas to carry out works and operations which may be required to increase rrodw.:l ion and to dedicate specific volume of the naturnl gas produced towards 1he requirements of the domestic market. (6) The volume of natural gas to be dedicated by a lessee towards tile domestic gas delivery obligation shall be bnsed on an allocation system nmong lessees as detem1ined by the Commission upon consultation with the Authority with consideration of sup porting infrastructure a va ilab iIi ty. (7) A lessee shall be obliged to deliver the volume ofnatum! gas prescribed under subsection (6) to a wholesale customer determined by the domestic gas aggregator and at a location indicated by the domestic gas aggregator under section I 56 of this Act. (8) Subject to the provisions of subsection (7), a lessee who foils to comply with the domestic gas delivery obl igrition shall incur a penulty US or $3 .5 0 per MM Btu not de [ivered, provided that, where the lessee has signed a gas purchase and sale agreement with a wholesale supplier of the strategic sectors, the penalty for failure to deliver shall be as stated in that agreernenl. (9) The penalty amount of US $3.50 rer MMBtu referred tu under subsection ( 8) may be adj Listed as the Commission rnny prescribe in u regu hit i011 made under this Act. ( l O) A lessee shall not incur a penn Ity prese ribed under su bseet io 11 ( 8 ), where it can establish that its failure to comply is as a result of~ (a) force majeure ; ( b) the in abi Iity of a purchaser to accept a! located natural gas volumes : (c) the i nab iIi ty to transport the a Iloc ntcd nn turn I gas for rcaso 11 s beyond the control of the !essee; or (d) the failure of a purchaser to pay for alloc:ited natura I gas volumes. Petroleum Industry Act, 2021 2021 No. 6 A 213 or (11) The Commission shall discontinue the imposition domestic gas delivery obligations, where the Authority has detennim:d under section 167 (3) of this Act that the natural gas market has attail1cd f'ull market status. ( 12) U pan being a I located the vo I umes to be supp! ied u ndcr the domestic gas supply obligation under subsection ( l ), the lessee shal I submit a marketable natural gas production and supply plan consistent with these obligations to the Authority. (13) A producer-customer of the domestic gas aggrcgntor shall pay compensation to customer-client for any loss suffered as a result of default to supply marketable natural gas in accordance with a gas pu rchasc order issued by the domestic gas aggregator. (14) A lessee who does not comply with the domestic gas delivery obligation as directed by the Commission shall- (a) in addition to the penalties provided under subsection (8), not be entitled to supply natural gas to any new midstream gas export operations, provided that this provision shall not apply to gas sales agreements already entered into ; and (b) where the lessee is supplying natural gas to midstream gas export operations, the Commission may impose other sanctions as are prescribed in a regulation made under this Act. ( l 5) An approval for the supply of natura I gas for export projects sha 11, from the effective date, be subject to prior comp! iance by the lessee with its domestic gas delivery obligation. (16) Domestic gas delivery contracts entered into by lessees or licensees prior to the effective date and continuing after the cl'fectivc date, shall be counted towards their domestic gas delivery obligation under lhis section. PART III-GENERAL Am,flNISTRATION OF :'vh1>sT1u:AM AND DoWNsTREM,! PETROLEUM OyrnAT!ONs

111.-( l) The Authority may grant, renew, modi ly or extend indi vidua! r-.fa!l..:rs licences or permits, provided that, where it relates to the establishment of rd11ti1t.i; lo refineries the licence shall be issued by the Ministeron the recommendation li<.:..:m:..: uppl it:ation~. of the Authority. (2) The Authority sha! l only grant a Iicence form idstrearn or downstream petroleum operations, where- (a) it meets the technical standards required for petroleum operations based on good international petroleum industry practices; A 214 2021 No. 6 Petroleum lndu.,·11:1· Act, 2021 (b) the location and size of the area occupied by the foci!itics 01· right of way is acceptable to the Authority ; ( c) it meets the hea Ith, safety and env ironmen ta I sin ndards, ns determ i11 ed by the Authority; and (d) it provides for the efficient and economic use of facilities and pipelines. (3) The Authority shall only grant a licence for midstream petroleum operations where it- (a) does not involve excessive capital or operating expenditures; (b) includes an acceptable environmental management plnn under section 102 of this Act; (c) includes a decommissioning and abandonment plan and a decommissioning and abandonment fund that comp! ies with sections 232 and 233 of this Act; ( d) provides for the eIi mi nation of routine natl! rn l gas na ring ; (e) does not relate to midstream petroleum operations that would conflict with a licence already granted; and (f) inc!udes- (i) a detailed programme for the recruitment nm\ trn ining ofN igerians in a!J phases of petroleum operations handled directly by the !icensce or through agents an cl contractors of the licensee, and (ii) provision for scholarship schemes, intcrnsh i ps, conti 11uous professional development and other training requirements. (4) An application for the grant, renewal or extension of a licence or permit shal ! - (a) b~ made to the Authority in the form and manner prescribed by regulation; (b) be accompanied by the payment of a prescribed fee, where appl icab!e, together with information or documents as prescribed in the regulations under this Act; and (c) inc Iude a decommissioning and abandonmem plan, where the Ii cc nee contemplates the construction of pipelines, storage tanks, processing or other facilities. (5) The Authority may furnish an applicant for the grnnt, renewal or extension of a Iicence or permit, with non-confidential information as may be necessary to fac i1itate the filing of the application. Petroleum Indushy Act, 2021 2021 No. 6 A 215 (6) An applicant for a licence or permit, who is an aniliate of a body corporate that has applied for or ho tds any other Iicencc or pc rm it sha Il disc lose sue h re lat ionsh ip to the Authority in its appl ica ti on. (7} The Authority shall consider information prc:.cntcd in respect of an application for a licence or permit, including represenh1tions from interested parties in favour of or against the granting, extension or rcnewa I of the Ii cence or permit and shall infonn the applicant of its decision within 90 days of the application. (8) Where the Authority has dee ided to grant a Iice nee or permit, it shall pub Ii sh a notice of its dee is ion in the form and manner prescribed in regu !ations issued by the Authority. (9) Where the Authority decline an application, it sha 11 inform the applicant of its refusal of the application, reasons for the rcl'usal and may state a reasonable time within which the applicant may make fmther representations. ( l 0) The Authority shall consider any representation made by an applicant for a Iicence or penn it on the refusa I of an application, where such representation involves new information not previously considered. ( 11} The Authority shal I not consider further app Iicn t ion or representation made by an applicant in respect of a refusal of an application previously considered and rejected by the Authority. ( 12) An applicant that is not satisfied with the reasons given by the Authority for refusal of an application may apply to the Fcderal High Court for a judicial review. 112.-{l) The Authority shall publish a notification of any application /\d,cr1i~nicn1 made for the grant of a licence or renewal under this Part in a manner prescribed 11 l'lil·1.·1u.-c by a regulation underthisAct. _ · · applicalion;;. (2) Upon the publication of the notification of the upplication referred to under subsection (I}, interested parties may co·m ment or make representations to the Authority in respect of the application in accordmicc with the time prescribed by regulation under this A et. (3) Upon the grant or renewal of a licence, the Authority shall publish notification of the grant or renewal in the form and manner prescribed by regulation under this Act.

113.-(l) The Authority shall make regulations and guidelines for the l .k-..:11;;ing grant or renewal of licence for midstream and downstr1:an1 petroleum reguhil ili11:-;. ·. ,·· ~ operations. A 216 2021 No. 6 Petroleum Industry Act, 2021 (2) The Authority shall in consultation with the Commission ensure the implementation of the domestic crude oi ! supply obligation and domestic gas delivery obligation. (3) The Authority shal I ensure third party access to foe ilit ies and pipc Ii ncs for midstream and downstream petroleum operations where such facilities and pipelines are operated for the own account of the Iiccnsee and shall ensure open access where the facilities and pipeli ncs arc operated by the Iken sec on an open access basis. ( 4) The Authority shall encourage third party investment in faci litics nnd pipelines for midstream and downstream petroleum operations. (5) The Authority may make regulations 011 tariffs, which shall be consistent with the tariff methodology set out in this Act. (6) The Authority may make such other regulations consistent with the regulatory functions of the Authority under section 32 of this Act. Conditions 114.--(1) Conditions in a licence or permit issued under this Act may in licences or require the holder of a licence or permit to- permits. (a) comply with any directions of the Authority in relation to matters specified in the licence or permit; (b) undertake or refrain from anything specified in the Iicencc or permit ; (c) secure the approval of the Authority prior to undertaking anything specified in the licence or permit; (d) comply with relevant industry codes, standards and market rules; (e) unde11ake its activities _subject to the prescribed tariffs or tariff methodology; (f) provide relevant information to the Authority; (g) prepare and submit to the Authority true, fair and sufficient annunl statements in such form, and particulars as the Authority may require ; (h) make available to the Authority such books as may be requested by authorised officers of the Authority; (i) impose restrictions on the disposal of assets; (i) adhere to undertakings made within a business plan submitted as pan of the application process; (k) prepare and submit to the Authority such information and periodical reports as the Authority may require; (I) publish terms of access to its transportation or distribution pi pcl i11c or petroleum liquids or gas transportation networks as the case may be~ and Petroleum Industry Act, 2021 2021 No. 6 A 217 (111) operate its licence or perm it and related foci Iities, if any, according to the standard of a reasonable and prudent operator. (2) The duration of a licence or permit shall be specified by regulations made under this Act and the conditions appl icab!e to the licence or permit may cease to have effect or be modified in accordance with terms specified in the licence or permit. (3) A licence or permit of the same class granted by the Authority, slrnll contain similar conditions representing standard conditions for that class and any difference in the conditions in the licence or permit shall only be for good reasons, which shall be published in the Federal Government Ga=elle. (4) Subject to this Act, the Authority shal I have power to include special conditions specific to a particular licence or permit or to a holder of the licence or permit, provided that the special conditions are designed to meet specific circumstances and sha II not be a disadvantage to an other ho! der of a Ii ce nee or permit. (5) The Authority may specify in a licence or permit a date on which activities shall commence. (6) The Authority may provide that an activity be exclusive for all or part of the period of the licence or permit for a- (a) specific purpose ; (b) specified geographical area and route; or (c) combination of paragraphs (a) and (b ).

115.-(1) A licence or permit shall be issued subject to compliance by Cump;:nsatil111 the applicant with the provisions of the Land Use Act in respect of compensation for acqu i~ i lirn1 for acquisition of land for midstream and downstream petroleum operations. urlnnd. Cnp. 1.5. LFN. 200.L (2) The Governor of a State of which land is required for canying out operat tons Cnp. L5. or activities subject to a licence or permit may issue a certificate of occupancy L!'N. 100.J. under the Land Use Act in respect of the land and in accordance with existing state law.

116. A holder of a licence or permit shall not discriminate against r I General customers, classes of customers or their related undertakings in respect of no11- access, tariffs, prices, conditions or standards of scrv ice, except for just ifinb le discri1ni1m1il111 flfUI isitlllS. and identifiable differences regarding matters such as quantity; transmission d[stance, length of contract, load profile, interruptible supply or other distingt1ishing features approved by the Authority. A 218 2021 No. 6 Petroleum Indus/Jy Ac:!, 2021 Assignment 117.-{l) A holder of a licence or permit shall not, without the prior or transfer of written consent of the Authority, assign or transfer its licence or permit or ,111y licence o; right or obligation arising from the licence or permit. permit. (2) An application for assignment or trnnsfoi· ofa licence or permit slwl I be made to the Authority, which may require the applicant to publish a noti.:c &the application in the form, manner and time prescribed by regulation undcr this Act. (3) The Authority shall, in the de1ermination of whether a licence or permit is to be assigned or transferred,- (a) follow the same procedure with appropriate modifications~ (b) apply the same rules and criteria ; (c) consider the same issues as if the party to whom the licence or permit is being assigned or transferred is applying for a new Iiccncc or new permit; and (cl) consider the representations made to it by third parties in respect of the application. (4) The Authority shall, subject to subsection (3), communicate in wi·iting, its approval or refusa I of an app Iication for assignment or transfer or a Iiccn cc or penni t with in the time prescribed by regu !atio 11 under this Act. (S) Where the Authority does not approve or refuse an app!icat ion and fails to communicate its decision to an applicant for the assignment or lr.i nsfor of a Iice nee or pem1it with in the prescribed ti rne, the app licntion sh a I! be deemed to be approved. (6) Where the Authority refuses the grant of an application for an assignment or a transfer of a licence or permit, it shall communicate to the app! icant the reason for the refusa ! and shu !I gi vc rcasona bIe ti Ine wi l hi 11 \ vh ic h further representation may be made by the applicant or by a third party in respect of the application. (7) Where the Authority grant consent to an assignment or transfer or a licence or pennit, it shall notify the applicant in writing, subject to any condition it may consider appropriate. Suspension 118.-(1) The Authority may suspend or amend the conditions applicable nnd to a licence or permit or include additional conditions su~ject to subsection (2). amendment o I' conditions (2) The Authority shall not suspend or amend any condition applicable in a licence to a licence or permit or 1nclude additional conditions to a licence or permit or permit. unless it gives the holder~ (a) a written notice of its intention and n drnft copy of the proposed suspension or amendment; and Petroleum Industry Act, 2021 2021 No. 6 A 219 (b) an opportunity to make a wri tte11 su bm iss ion to the A uth ori ty within the time specified by regulation. (3) The procedure for the suspension or amendment of a condition in a licence or permit shall be as prescribed by the Authority in :1 regulation under this Act. (4) A holder of a !icence or permit who is d issaLisfied with the decision of the Authority to suspend or amend a condition in a Iicence or perm it may apply to the Federal High Cou11 against the decision. 119.--{ l) The holder of a licence or permit may, upon un application in Su rn:n dc1· (I I" the form, manner and meeting any condition prescribed by the Authority inn , !iccncc or regulation made under this Act surrender the licence or permit, where- permit. (a) the licenced or permitted activity is no longer required; (b) the licenced or permitted activity is not econorn ical !y justifiable; (c) another qualified person is witling and able to-assume the rights and obligations of the holder of the licence or pennit in accordance with the requirements and objectives of this Act; and . (d) applicable, the holder of the Iicence or perm it has w1,, i, i 1cd with the requirements of the law in respect of re Iinq uish ment, dccomm issi on ing and abandonment of installations and reclamation of !and. (2) A holder of the licence or perm it who has commenced activities and has ongoing operations sbal I, except a shorter period is st ipu lnted i11 the Iicence or permit, give the Authority a minimum of 12 months' notice in writing of its intention to cease its activities. (3) The form and procedure to be fol lowed in surrendering a Iice nee or permit under subsection (2) shall be as prescribed by regulation. 120.--{ l) Notwithstanding the provisions ofClmpter 2 of this Act related G rnumb for to midstream and downstream petroleum operations, a licence or permit may tlw be revoked, where----- I"~\ OC,ll ion !l r a liccnc~ or (a) the holder becomes insolvent, bankrupt, enters into an agreement or pcrmil. _ composition with its creditors ortakes advantage of any enactment fortbe benefit of the debtors or goes into liquidation, except as part of a scheme for an arrangement or amalgamation ; (b) upon the transformation or dissolution of the company or corporation, except it is for the purpose of amalgamation or reconstruction, provided that the prior written consent of the Authority has been obta.ined ; (c) a holder of a licence or perm it fails to commence activity with in the timeframe prescribed in the licence or pennit; A 220 2021 No. 6 Petroleum Indus!ry Ac!, 2021 (d) the holder ofa licence or permit fails to comply with applicnb!c lnws aml regulations on terms and conditions of its licence or permit; ( e) the ho Ider interrupts midstream or downstream petro Ieu 111 opcrn l inns for a period of more than l 8 0 consecutive days without just i t1ea t irn1 as provided for in the licence or permit, the acknowledgement of an event of' force majeure, shall be .an acceptable justification for interruption; (f) the holder assigns or transfers any interest in the licence or pcrmil without obtaining the prior written consent of the Authority; (g) the holder has acquired the licence or permit based 011 folsc representation or contrary to corrupt practices and money laundering laws; (h) the holder has failed to comp!y with environmental obligations as required by law or the provisions of the l icenc c or permit ; (i) the holder is owned wholly or in part, directly or indirectly or is controlled by a former or serving public official or member of the Government, who obtained his interest in the applicable licence or lease other than as permitted by applicable law; and (j) the holder fai Is to abide by any expert dctcnn inat ion, arb itrn t ion awmd or judgment arising from the dispute resolution provisions set forth in u licence or this Act. (2) Subsection (I) (i) shal ! apply to a former public official or member of Government only where the applicable interest was acquired while the pub 1ic official was in office or was a member ol'the Government. Notice of 121.--(1) Prior to a decision by the Authority to revoke n licence or tldault prior permit under section 120 of this Act, the Authority sha!l- to re\·ocation. (a) serve a notice of default on the holder setting forth in rcasonnb!c detail the default of the holder; and (b) give the holder 60 days within which to remedy the defau!L. (2) Where the Authority is satisfied with the remedy of the holder under subsection ( 1) (b ), the revocation process shall terminate. (3) Where, at the expiration of 60 days, the ho!der fails to remedy the default, the licence or permit shall be terminated. (4) A notice of default sha!! be- (a) sent by the Authority to the last known address of the holder of licence or permit or its !ega! repres~ntntive in Nigeria, or (b) published in the Federal Government Gc1zeffe or on the website or the Authority, each of which shall constitute sufficient notice to the holder or licence or permit of the notice of defau It. Petroleum Induslly Act, 2021 2021 No. 6 A 221 (5) Revocation shall be without prejudice to any- (a) liabilities which the holder may have incurred; or (b) claim, which the Authority, the Government or any third party may make against the ho !d er of licence or permit. (6) A revocation decision shall be published in the Federal Government Gazette and the Authority shall amend relevant registers maintained by it to reflect the revocation. 122.~ I) The Authority shall, in exercising its powers of commercial Tariff regulations, be guided by the following principles in designing a pricing principles. framework for transportation, distribution and processing petroleum tariffs- (a) for transportation, distribution and processing of petroleum shall be on a cost.reflective basis ; (b) charged shall permit a reasonable return for licensees on their investments; (c) shall not discriminate between customers with similar characteristics under section I I 6 of this Act ; and (d) shall be determined in US Dollars or other foreign currency as applicable with a view to attracting foreign investment to midstream and downstream petroleum operations, provided that payments of the tariffs may be made in the respective foreign currency or equivalent value of Nairn at the open market rate published by the CBN as applicable under the regulations. (2) The tariff methodology for tariffs re! ated to new gas transportation pipelines, gas distribution networks and facilities requiring a gas processing licence sha! I inc !ude, that- (a) tariffs shall be deten11ined in US Dollars, but may be paid in Nairn, where the applicable exchange rate shall be based on the Securities and Exchange Commission over the counter market rate or any successor rate ; (b) the capital costs may be recovered in equal installments over a period as determined by the Authority; (c) the after tax rate of return on equity s ha JI be such that it attracts major investment and the rate ofreturn shal! apply during construction; (d) where sho11 pipelines connecting producers or consumers to a gas transport pipeline or gas transpoit pipeline nehvork and in other justified cases, the Authority may approve that capital costs be based on 100% equity, otherwise a reasonable debt or equity ratio shall apply; (e) where a debt or equity ratio applies under paragraph (d) of this subsection, the cost of any interest and financing charges shall be recovered; A 222 2021 No. 6 Peh·oleum Industry Act, 2021 (f) operating costs, including allocation for overhead and profit margin on operating costs, shall be recovered and the costs shall be adjusted for inflation; (g) line losses and gas energy use shall be taken into account; · (h) any applicable tax, levy and duty shall be recovered; (i) where capital costs have been fully recovered, the tariff shall no longer include the items under paragraphs (b), (c) and (d); nncl (;) tariffs shal t be based on the estimated throughput as estimated by the Authority, notwithstanding the capacity of the gas transpmiation pipeline, gas distribution network or processing plant. (3) The Authority may by regulation modify or provide frniher detail on the provisions of subsection (2) and establish more favorable tariffs for credit worthy shippers willing to commit to long term ship-or-pay agreements foci 1itating the financing of the respective pipelines or plants. (4) The Authority may approve negotiated tariffs where one or more wholesale customers connect with a pipeline to a transportation network or transpo11ation pipe] ine or in other cases where justified i11 the opinion of the Authority. Tariff 123.-(1) Tariffs charged by licensees for the use of uny facility or m~th odolog.y. infrastructure licenced by the Authority for use in midstream and downstream petro !eu m operations shall be set according to one or more tariff methodo logics adopted by the Authority for a particular set of licences, in conformity with the applicable fiscal regime, provided that the tariff methodologies sha! ! - (a) a Ilow an operator to recover reasonable cost incurred, bcn eh marked against industry best practice and a reasonab Ie return on the cap itn I in vested in the business ; (b) ensure the efficiency of the business; (c) ensure the continued improvement of the quality of s_ervices; (d) avoid discrimination between customers with similar characteristics, such as similar size or similar consumption profile under section l 16 of this Act; (e) in case of distribution licences, ensure efficient charges relating to petroleum product or natura I gas su pp! y covering Acting, metering and other services ; (f) avoid economic distortions and ensure a competiti\"e mmket for the sale and distribution of petroleum products and natural gas in Nigeria ; nnd (g) avoid cross-subsidies among different categories of consumers. Petroleum Industry Act, 2021 2021 No. 6 A223 _ (2) Tariffs may differentiate between credit worthy shippers willing to make long tenn ship-or-pay agreements facilitating the financing of the pipeline or plant and other shippers or users. (3) The Authority shall, prior to establishing a tariff methodology, initiate and conduct a stakeholders' consultation in the manner specified in subsection (5) to consult applicants, operators, consumers, prospective customers, consumers associations, associations of prospective customers and any other persons with interest in the subject matter of the proposed tariff methodology. (4) The Authority may, in establishing a tariff methodology, take into consideration the submissions of the stakeholders' consultation referred to in subsection (3). (5) Prior to holding a stakeholders' consultation referred to in subsection (3), the Authority shall publish in at least two national newspapers with '>Yide coverage and on its website, notice of- (a) the stakeholders' consultation; (b) its invitation to licensees and stakeholders to participate in the stakeholders' consultation ; {c) the venue and period during which the stakeholders' consultation is to be held; (d} the nature of the matter to which the stakeholders' consultation relates; (e) the matters upon which the Authority would require submissions ; (/) the form in which licensees and stakeholders are to make submissions to the Authority on the subject matter of the stakeholders' consultation; (g) the period of notice for the commencement of the stakeholders· consultation, which shall not be less than 21 days ; and (h) the address or addresses to which the submissions may be sent. {6) Notwithstanding the requirements under subsection (3 ), the Authority may, due to the exigency of the circumstances, establish a tariff methodology without conducting a stakeholders' consultation, where it considers it necessary to do so. (7) A tariff methodology made under subsection ( 6) shall be va! id for six months with effect from its commencement date, except it is confirmed following a stakeholders' consultation conducted in accordance with subsections (4) and (5). (8) The Authority shall fix a date for which the determined tariff methodology shall come into effect and shaH cause the notice of the commencement date to be published in at least two national newspapers with ,vide coverage and its \Vebsite. A 224 2021 No. 6 Petroleum Industry Act, 2021 (9) Where the Authority considers it necessary that an existing tariff methodology or tariff should be amended, the Authority shall conduct a stakeholders' consultation on the proposed amendment in accordance with subsections (4) and (5). ( l 0) A person under obligation to set tariffs shall be bound by operative tariff methodology adopted through the method prescribed in this section. ( 11) A holder of a licence engaged in the sale of petroleum products to retail customers or who is subject to third party access or open access obligations under this Act, shall display at its office a current copy of the \ ', tariffs applicable to the services provided by the holder. ( 12) A holder of a licence shall not pass the costs of any fine or penalty incurred under this Act or any other law to a consumer. Approval 124.----{l )A licensee subject to tariff regulation by the authority shall- and publication (a) propose tariffs for the approval of the Authority prior to the application ofcharging of the charges ; structures. (b) impose tariffs in accordance with the approval referred to under paragraph (a) ; and (c) publish the tariffs as required by the Authority in a manner that ensures that the customers of the Iicensees are able to identify and ea le uIate the charges for which they will become liable. (2) The Authority shall, within 24 months after the effective date, review, confirm or modify all applicable tariffs including for licences under sections 125 (6) and 174 (6) of this Act. PART IV-ADMINISTRATION OF MIDSTREAM AND DOWNSTREAM GAS OPERATIONS Activities 125.---{1) Except in accordance with an appropriate licence issued by requiring a the Authority, a person shal 1not undertake the fo Hawing activities with respect licence for to midstream and downstream gas operations- midstream and (a) establish, construct or operate a facility for the processing of natural doKnstream gas; gas operations. (b) establish, construct or operate a faci Iity for the storage of natural gas ; (c) establish, construct or operate a gas transportation pipeline; (d) engage in bulk transportation of natural gas by raii, barge or other means of transportation; ( e) operate a gas transportation network ; Petroleum Industry Act, 2021 2021 No. 6 A225 (f) establish, construct or operate a terminal, jetty, or other facility for the export or importation of natural gas; (g) engage in wholesale gas supply; or ( h} engage in the construction or operation of petrochemical or ferti Iiser plants. (2) Except in accordance with an appropriate licence issued by the Authority, a person shall not undertake the following activities with respect to downstream gas operations- ( a) retail trading, d istri buti on or supplies of natural gas ; (b) establishment, construction or operation of a gas distribution network; or (c) establishment, construct ion or operation of a facility for the supp iy or trading of natural gas. (3) The Authority may, by regulation, prescribe additional activities to be undertaken only on the basis of a licence or permit and shall have power to issue licences or permits for the activities in accordance with this Act. (4) Where a person engages in any of the activities set out in subsection ( 1), (2) or ( 3) with out a licence or perm it, the Authority shall- (a) seal the premises where the activity is unde1taken; (b) seize the facilities by which the activities were unde1taken; (c) confiscate and dispose of equipment or materials employed by the person in the activity in a manner prescribed by regulations under this Act; ( d) impose pen a hies ns prescribed by regulations under this Act ; or (e) impose any combination of the provisions under paragraphs {a), ( b), ~~~ . (5) Notwithstanding any provision of this Act, a person who engages in any of the activities set out in subsection (I), (2) or ( 3) without a licence or permit, commits an offence and is liable to imprisonment for a term of- {a) one year or to a fine prescribed by regulation, in the case of an activity requiring a licence; or (b) six months or to a fine prescribed by regulation, in the case of an activity requiring a permit. (6) A holder of a subsisting tease, licence or permit who is engaged in activities in midstream or downstream gas operations prior to the effective date shall, ,vith in I 8 months from the effective date, apply to the Authority for, and the Authority may lssue the appropriate licence or pennit, where applicable. A 226 2021 No. 6 Petroleum Industry Act, 2021 (7) The provisions of subsections (4) and (5) shall not apply to any person under subsection (6) until the Authority has considered the application and given a decision. (8) Where any person, in applying for a licence or pennit, kno\.vingly makes a false or misleading statement, the Authority may - (a) suspend or revoke the licence or permit; or (b) impose a fine on the licensee or permit holder on the basis of the false or misleading information. Special 126. In addition to any matter provided under section 113 of this Act, regulations the Authority may issue regulations with respect to midstream and downstream for gas operations, which shall include----- midstream and (a) the establishment and operation of a wholesale natural gas market downstream scheme to ensur~!mntinuity of supply of natural gas to customers, which gas operations. will apply to the owners and operators of gas transportation pipelines, shippers of natural gas, holders of natural gas storage and distribution licences and gas retailers ; and (b) matters anci!lary to or consequential on the activities set out in paragraph (a). Rights of 127. Subject to applicable !aw and the terms and conditions prescribed war relating by the Authority, a licensee or permit holder is entitled to rights of way for the to laying, operation and maintenance of pipelines, communication lines and other midstream and similar lines through or across the areas the licensee or permit holder may do,rnstream require for carrying on midstream or downstream gas operations under the gas licence or permit. operations. Surface 128. The Authority may for the purpose of efficiency, preserve in rights accordance with applicable law, rights of way, easements or other rights over reserved for any surface or seabed areas subject to an existing licence or permit, which the Authority may be necessary for the laying, operation and maintenance of transportation relating to pipelines, communication lines, power lines and other similar lines and any midstream right of way or other rights reserved sha!l continue for the benefit of any and entity to whom the Authority may subsequently grant the same for a licence do,rnstream gas or permit. operations. Grant ofa 129,--( l) Subject to sections I I 1 and l 25 of this Act, the Authority may gas upon approval of an application and payment of prescribed fees, grant and processing issue a qua! ified person a gas processing Iicence, which shal I permit the person licence. to install and operate the fol lowing faci !ities, on its own account or on the basis of open access for customers as stipulated in the licence,~ Petroleum Industry Act, 2021 2021 No. 6 A227 (a) gas conditioning plants, to condition natural gas removing C02, H2S or other impurities; (b) gas processing piants, to produce ethane, propane, butane, other natural gas liquids and marketable natural gas; (c) gas to liquids plants; (a) liquefied natural gas (LNG) plants; (e) ethane extraction plants; and (f) other plants, which in the opinion of the Authority, require a gas processing licence. (2) The Authority shall, in considering an application for a gas processing licence, take into account the economic case for the specific facility as provided under subsection (1 ), including the potential demand for its use.

130. The holder ofa gas processing licence shall unde11ake the activities General contemplated by the licence in a manner that complies with the following duties of the holder of a general obligations- gas (a) to construct, operate and maintain its gas processing equipment and processing facilities in an economical, safe, reliable and environmentally sustainable licence. manner; ( b) shut down its faci Iities in emergencies and in order to carry out maintenance or in accordance with curtailment directives issued by the Authority; (c) manage its facilities as a responsible and prudent operator; (d) avoid any act or omission that may affect the compatibility of the processing facility with any natural gas facility or nenvork that is likely to prejudice the pub! ic interest or the integrity ofnetwork operations; (e) operate the facilities in a manner that results in output of products with specifications as determined by the Authority; (fJ to operate its facilities subject to open access comrnitmei1ts as stipulated in the licence or where the licence is issued for operations on its O\Vn account, provide third party access in an equitable manner; (g) treat al! customers in a non~discrim inatory manner under section 116 of this Act, where the licence is issued on an open access basis ; and (h) abstain from activities, \Vhich in the opinion of the Authority may prevent, restrict or distort competition. A 228 2021 No. 6 Peh·oleum Indushy Act, 2021 Conditions 131. A gas processing licence shall, in addition to the conditions that applicable to may be imposed by the Authority under section 114 of this Act, be deemed to a.gas processing be granted subject to the condition that- licence. (a) the holder shall not process natural gas on its own account, where the licence is issued on an open access basis; ( b) a licensee operating on its own account, being an affi 1iate of a lessee, may own, or the affiliate may own, the natural gas in a gas conditioning plant or gas processing plant for the purpose of conditioning or processing natural gas from the fields under lease with the affiliate, subject to such third party access provisions as may be included in the licence; (c) a licensee operating on its own account, who is also a wholesale customer or a holder of a gas distributor licence, may own the natural gas in a gas processing plant,ethane extraction plant or other plant requiring a gas processing licence, where the principal user of the natural gas is the wholesale customer or gas distributor, subject to any third party access provisions as may be included in the licence; (d) the holder shall conduct its licenced activities safel:1 and reliably in compliance with any law in force and any prescribed health and safety regulations, standards and operating procedures made under this or any other Act; (e) the holder shall have regard to the effect of its licenced activities on the environment and comply with the requirements for environmenta I protection, management and restoration under this Act and any law in force~ and (f) the holder shall mark, maintain and secure the boundaries of its facilities and associated infrastructure constructed under the terms of its licence and any law in force. Grant ofa 132.-(l) Subject to sections 11 land 125 of this Act, the Authority may bulk gas upon approval of an application and payment of prescribed fees, grant nnd storage issue a qualified person a bulk gas storage licence authorising the holder to licence. undertake the bulk storage of natural gas either for its own account or on behalf of customers as stipulated in the Iicence. (2) The Authority shall, in considering an application for a bulk gas storage licence, take into account the economic case for a bulk gas storage facility, including the potential demand for its use. General 133. The holder of a bulk gas storage licence shall unde1take the activities duties of ri contemplated by lhe l[cence in a manner that complies with the following bulk gas general obligations- stornge lic~nsec. Petroleum Industry Act, 2021 2021 No. 6 A 229 (a) establish and make available to the public at its offices, the-:- ( i) procedure and terms for obtaining third paiiy access or through put services on an open access basis, and (ii) method of response to the request for its services ; (b) construct, operate and maintain its facilities in a safe, economical, reliable, and environmentally sustainable manner taking into account any strategic plans formulated by the Authority; (c) shut ·down its facilities in emergencies· and in order to carry out maintenance or in response to curtailment directives issued by the Authority ; (d) where the licensee operates for its own account, grant to third parties the right to use or have access to capacity within its facilities for the purpose of ensuring competitive gas supply; ( e) consult with and obtain from the Authority written permission prior to any modification of technical and operational rule of practice concerning the operation ofits facilities; (f) conduct its licenced activities in a non-discriminatory manner under section 116 of this Act, where the licence is issued on an open access basis ; (g) manage its facilities as a reasonable and prudent operator; and (h) abstain from activities, which in the opinion of the Authority may prevent, restrict or distort competition.

134. In addition to conditions the Authority may impose under section Conditions 114 of this Act, a bulk gas storage Iicence shall be deemed to be granted applicable to a bulk gas subject to the conditions that- storage (a) a licensee operating on its own account, being an affiliate of a licence. lessee, may own, or the affi Ii ate may own, the natural gas in the bulk storage facilities for the purpose of storing natural gas from the fields of the affiliate, subject to such third party access provisions as may be included in the licence ; (b) a licensee operating on its own account, who is also a wholesale customer or holder of a gas distributor licence, may own the natural gas in the bulk storage facilities, where the principal user of the natural gas is the wholesale customer or gas distributor, subject to any third party access provisions as may be included in the licence ; (c) the holder conduct its licenced activities safely and reliably in compliance with any law in force and prescribed health and sa f:>ty regu !ations issued under this or any other Act; (d) the holder have regard to the effect of its licenced activities on the environment and comply with the requirements for environmental protection, management, and restoration under this Act and any law in force; and A 230 2021 No. 6 Petroleum Jndmt1:v Act, 2021 (e) the holder mark, maintain and secure the boundaries of its facilities and associated infrastructure constructed under the terms of its licence and any law in force. Grant of gas 135.-{1) Subject to sections 111 and 125 of this Act, the Authority tran,;;pnnation may upon approval of an application and payment of prescribed fees, grant pipeline and issue a qualified person a gas transportation pipeline licence with the Jicence. exclusive right to own, construct, operate and maintain a gas transportation pipeline within a route as defined in the licence for its own account with third party access provisions or as common carrier as stipulated in the licence. (2) The Authority shall, in considering an application for a gas transpmtation pipeline licence, take into account the economic case for a gas transpo11ati on pipe I ine, inc Iud ing the potent iaI demand for its use. General 136. The holder of a transportation pipeline licence shall undertake the duties ofa activities contemplated by the licence in a manner that complies with the transportation following general obligations~ pipeline O\\ner. (a) establish and make available to the pub Iic at its offices, the~ (i) procedure for obtaining and terminating transmission and interconnection services for natural gas, on a third party access or open access basis as determined in the licence and publish the tariffs estabiished by the Authority, and (ii) method of response to the request for its service; (b) construct, operate and maintain its gas transportation pipeline in a safe, economical, and reliable manner taking into account any strategic plans formulated by the Authority; (c) meet on a reasonable endeavours basis requests for transpo11ation above contractual volumes; (d) shut down its gas transportation pipeline in emergencies and in order to carry out maintenance or in response to curtailment directives issued by the Authority; (e) provide access on a non-discriminatory basis under section l 16 of this Act, where the licence is granted on a common carrier basis; (f) consu It with and obtain from the Authority written permission prior to any modification of techn iea! and operational rule of practice concerning the operation of its pipeline; (g) manage its gas transpmtation pipeline as a reasonable and prudent operator; (h) where the pipeline Is operated on a common carrier basis, ensure development and operation of terms for access to the gas transportation Petroleum lndusny Act, 2021 2021 No. 6 A 231 pipeline in conjunction with the natural gas shipping community and where applicable comply with the relevant network code; ( i) where the pipeline is operated for its own account, operate its faci tities subject to third party access obligations under this Act and regulations prescribed by the Authority; and (i) abstain from activities, which in the opinion of the Authority may prevent, restrict or distort competition. 13 7. A gas transportation pipe line licence shal I, in addition to the conditions Conditions that may be imposed by the Authority under section 114 of this Act, be deemed applicable tu to be granted subject to the condition that- agas transpo nation (a) the holder shal I not supply natural gas to customers on its own account pipeline where the licence is granted on a common carrier basis; licence. (b) a licensee operating on its own account, who is an affiliate of a lessee, may own, or the affiliate may own, the natural gas in a gas transportation pipeline, for the purpose of- (i) connecting marketable natural gas produced in a field under a lease with an affiliate to another gas transportation pipeline or gas transportation network, and (ii) transporting natural gas to a plant for conditioning or processing natural gas from fields under lease with an affiliate, subject to third party access provisions as may be included in the licence; (c) a !icensee operating on its own account, who is also a wholesale customer or holder of a gas distributor licence, may own the natural gas in a gas transportation pipeline, where it is the principal user of the natural gas, subject to any third party access provisions as may be included in the Iicence ; (d) a licensee operating on its O\Vn account, who is also a holder of a wholesale gas supp !y licence, may own the natural gas in a gas transportation pipe! ine, for the purpose of connecting a lessee or wholesale customer to or from a gas transportation network or gas transportation pipeline, subject to such third party access provisions as may be included in the licence; (e) the holder shall conduct its !icenced activities safely and reliably in compliance with any law in force and prescribed health and safety regulations issued under this or any other Act; (f) the holder shall have regard to the effect of its licenced activities on the environment and comply with the requirements ofenvironmental protection, management and restoration under this Act and any law in force ; (g) the holder shall mark, maintain and secure the boundaries of the pipelines and associated infrastructure constructed under the terms of its licence and any law in force ; A 232 2021 No. 6 Petroleum Jndushy Act, 2021 (h) a pipeline transporting un-processed gas to a gas processing plant or gas conditioning plant shall require a gas transportation pipeline licence and the Commission shal!.~ (i) determine and advise the Authority on the characteristics of the gas to be transported, and (ij) cooperate with the Authority in determining possible third party access to the pipeline ; and (i) the gas transportation pipeline may, with the approval of the Authority~ be in whole or in part, a low-pressure pipeline at the request of the licensee. Grant of gas 138.-{1) Subject to sections 111 and 125 of this Act, the Authority may transportation upon approval of an application and payment of prescribed fees, grant and network issue a qualified person a gas transportation network operator licence operator licence. authorising the conduct of activities specified in the licence, which shall include--- (a) conveyance of natural gas through the gas transportation network on an open access basis ; (b) balancing the inputs and off takes from the gas transportation network; (c) providing access to shippers based on the gas network code under section 16 0 of this A et to the gas transportation network ; and (d) charging for the use of the gas transp01iation network based on tariffs established by the Authority. (2) The Authority shall grant only one gas transportation network operator licence within a geographica!ly defined area to a single network operator, provided that the Authority may at its discretion, issue licences to other parties for the operation of isolated or dedicated gas transportation pipe Iines and for connecting to the gas transportation network. General 139. The gas transpo1iation network operator shal! exercise the rights duties of a and obligations imposed on it in a manner that complies with the following gas geoeral obligations- transportation network (a) establish and make available to the public at its offices, the- operator. (i) procedure, tenns and conditions for obtaining and terminating access and interconnection services to the transportation network, and (ii} method of response to the request for its service ; (b) operate an efficient and economical gas transportation network for the safe and reliable conveyance of natural gas in such a manner that is designed to meet all reasonable demands for natural gas transportation ; Petroleum Industry Act, 2021 2021 No. 6 A 233 (c) operate a nomination and balancing mechanism and an equitable curtailment of natural gas transportation whenever technical or operational expediencies requires; (d) consult with and obtain from the Authority written permission prior to any modification of technical and operational rule of practice concerning the operation of its gas transportation network; (e) ensure the development and operation of the network code and terms for access into the gas transportation network in collaboration with the Authority, natural gas shippers, all licensees and permit holders operating essential infrastructure ; (f) ensure equitable and transparent access to the transportation network ; (g) manage the gas transportation net\vork as a reasonable and prudent operator; (h) abstain from activities, which in the opinion of the Authority may prevent, restrict or distort competitton ; and (i) enter into agreements with gas transportation pipeline owners, gas distributors and wholesale customers for connection to and operation oft.he gas transportation network.

140. Subject to this Act, the Authority may grant the following special Powers of a powers or authority to a gas transportation network operator to facilitate the transporr:ition network conduct of its !icenced activities- operator. (a) the power to request for and obtain from the relevant shippers, information required to operate the nominations and balancing mechanism, to operate the network or to facilitate competition ; (b) the rigbtto recover on the basis of an invoice, expenses reasonably incurred in undertaking its Iicenced activities, subject to any restrictions or conditions imposed by the Authority with respect to both the level and structure of its charges ; and (c) to purchase natural gas for its own operations for purposes such as testing and commissioning of fac iii ties, compression and Iine fill, but shall not supply natural gas to customers on its own accounc 141.-----{1) In addition to the conditions as may be imposed by the Authority Conditions under section 114 of this Act, a transpoiiation net'\.vork operator licence may applicable to a gas include an obligation to develop market rules in accordance with this Act. transportmi on (2) A gas transpo11ation network operator may be an owner of any or all net\YOrk operator of a gas transportation pipelines in a gas transpoi1ation network. licence. (3) Where a third party is the owner of a gas transportation pipeline in a gas transpo1iation network, the owner shall be paid the tariffs determined by A 234 2021 No. 6 Petroleum Industry Act, 202 l the Authority for non-operating owners of the pipelines by the gas transportation network operator. ( 4) A gas transportation network operator shall not misuse its monopoly position in the geographical area to charge franchise or other access charges for providing access to the gas transport network, other than the charges specifically permitted under this Act, and regulations made under this Act. Grant ofa 142. (l) Subject to sections l ll and 125 of this Act, the Authority may wholesale upon approval of an application and payment of prescribed fees, grant and gas supply licence. issue a wholesale gas supply licence to a qualified person. (2)A company who is a lessee producing natural gas is a qualified person for the purpose of subsection (l) and shall be entitled to apply for and be issued with a wholesale gas supply licence by the Authority. (3) A wholesale gas supply licence authorises the supplierto-- (a) purchase natural gas directly from any lessee or third party; and (b) sell and deliver wholesale gas to wholesale custoniers and gas distributors at any location in Nigeria. General 143. A wholesale gas supplier shall undertake the activities contemplated duties ofa by the wholesale gas supply licence in a manner that complies with the following wholesale general obligations, to- gns supplier. (a) provide a reliable supply of wholesale gas to wholesale customers who have entered into a gas purchase and sale agreement with the supplier; and (b) abstain from activities, which in the opinion of the Authority may prevent, restrict or distort competition. Rights of a 144. Subject to the provisions of this Act, the Authority may grant the wholesale following specific powers or authority to a wholesale gas supplier to facilitate gns supplier. the conduct of its licenced activities, the right to-- (a) terminate wholesale gas supply to a wholesale customer in the event of non-payment, following a notice period ; (b) recover from a customer, on the basis of an invoice and subject to any conditions imposed by the Authority on the level and structure of a licensee ·s charges and costs reasonably incurred in the supply of wholesale gas, including the cost of natural gas incurred by the supplier, the cost of transportation of natural gas ; and (c) enter a premises, in accordance with a metering code issued by the Authority, for the purpose of reading the meters, testing and maintaining metering equipment, disconnecting customers and to remove the meters. Petroleum lndus!Jy Act, 2021 2021 No. 6 A235 145.--{ I) In addition to conditions the Authority may impose under section Conditions 114 of this Act, a wholesale gas supply licence shall be deemed to be granted applicable: LO a subject to the supplier~ \\ holes ale (a) requesting security or applying a credit scoring methodology approved gas supply by the Authority in deciding whether supply is economical; licence. ( b) supplying marketable natural gas to a who !esa le customer with whom the supplier has entered into a gas purchase and sale agreement and who in order to connect to a gas transportation network or gas transportation pipeline is willing and able to----- (i) pay for the connection, (ii) construct its own gas transportation pipe! ine under section 13 7 ( c) of this Act. or (iii) pay the respective tariff to the supplier for the gas transportation pipeline owned by the supplier, subject to safety and network capacity constraints ; (c) conducting its licenced activities safely and reliably in compliance with any law in force and prescribed health and safety regulations issued under this or any other Act; and (d) complying with customer protection measures in accordance with sections 164, 165 and 166 of this Act. (2) A wholesale gas supplier shall undertake its licenced activities in a manner that complies with the conditions of the licence.

146.-( 1) Subject to sections 111 and 12 5 of this Act, the Authority may Gram of upon approval of an application and payment of prescribed fees, grant and retail gas issue a e; 1m!ified person a retail gas supp!y licence authorising the holder to----- supply licence. (a) sell or retail compressed or liquefied marketable natural gas to customers based on being a wholesale customer or third party access to gas distribution systems of gas distributors ; and (b) establish, construct and operate facilities to deliver compressed natural gas and small scale facilities for LNG, not requiring a gas processing I icence, for transportation by truck, railcar or marine vessel to customers in compressed or liquefied form, including customers-using LNG as marine bunker fuel. (2) A company who is a lessee producing natural gas is a qualified person for the purpose of subsection (I) and shall be entitled to apply for and be issued with a retai [ gas supp !y licence by the Authority. A 236 2021 No. 6 Pe1ro!e11m Jndus11:i· Ac,, 2021 (3) A retai 1gas supply licence authorises the gas retailer, to- (a) purchase marketable natural gas directly from a lessee, \\·holcsa!e gas supplier or third paity on a free market basis; and (b) sell and deliver compressed or LNG to customers at any location in Nigeria on a free market basis. General 147. In addition to conditions the Authority may impose under section duties of gas 114 of this Act or that may be prescribed by regulation, a retail gas supply retaikr. licence shall be deemed to be granted subject to the duty of the holder to-- (a) develop and maintain a safe, efficient, reliable and economical service for the retailing of marketable natural gas; ( b) cany on its business in a manner that sha !l promote corn petition and avoid monopoly in the natural gas market in Nigeria; (c) construct, operate and maintain its gas compressio!1 and liquefaction facilities in a safe, economical, and reliable manner taking into account any strategic plans formulated by the Authority; (d) shut down its gas compression and liquefaction facilities in emergencies in order to carry out maintenance or respond to curtailment directives issued by the Authority; (e) conduct its activities in a safe and reliable standard in compliance with prescribed environmental, health and safety-related regulations issued under this or any other Act ; (f) publish the prices to be charged and to be paid by a person to whom the gas retailer sells natural gas in a manner to ensure adequate publicity u n1ess the Authority direct otherwise ; and (g) comply with customer protection measures set out in sections 164, 165 and 166 of this Act. Grant of gas 148.-(1) Subject to sections I! I and 125 of this Act or regulations d istri bu! ion made under this Act, the Authority may upon approval of an app Ii eat ion and licence. payment of prescribed fees, grant and issue a qualified person gas distribution Iicence with rights to establish, construct, and operate a gas distribution system and to distribute and se 11 its n atura 1gas without discrimination to consumers in a local distribution zone. (2) Notwithstanding the rights of a gas retailer under this Act, the holder of a gas distribution licence shall be entitled to sell natural gas to customers that are not wholesale customers. (3) The Authority sha !1, in considering an application for a gas d istri but ion licence, take into account the economic case for the licence, including the potential demand for its use. Petroleum Industly Act, 2021 2021 No. 6 A237 (4) The geographical limit of a !ocal distribution zone shal I be defined in the relevant gas distribution licence. ( 5) The rights and duties under a gas distribution Ii cence sh al! be exc Ius ive to the gas distributor for the validity period of the d istri but ion Iicencc. (6) A gas distribution licence may- (a) include provisions for providing third party access to the gas distribution network to a gas retailer or gas distributor on its own initiative ; and (b) permit access to a gas retailer to the gas distribution network under terms and conditions agreed to by the parties. (7) Subject to subsection (6), the gas cl istributor s!m!I mvn the marketable natural gas in the gas distribution network.

149. A gas distributor shall undertake the activities contemplated by the General gas distribution licence in a manner that complies with the follO\ving general duties of a obligations, to------- gas distributor. (a) develop, operate and maintain an economical gas distribution network for the safe and reliable conveyance of natural gas ; (b) ensure a re! iable and efficient distriblttion ofnaturnl gas to customers on request, provided that it is economical to do so; (c) distribute and sell natural gas on request to a customer who is \Villing and able to pay for connection to the gas distribution network, subject to safety and network capacity constraints; (d) conduct licenced activities safely and reliably in compliance with any law in force and any health and safety~re!ated regulations issued by the Authority under this or any other Act ; (e) connect all customers within its local distribution zone in accordance with regulations if economically practicable to do so; (()offer and publish terms and conditions of access to its gas distribution network as required and publish gas prices applicable to different classes of customers, which have been approved by the Authority ; (g) comply with customer proteetion measures set out in sections 164, 165 and 166 of this Act ; (h) prepare a distribution development plan, within one year after the effective date or after having been granted the licence, for coi111ecting customers within its local distribution zone and any amendments as a resu It of economic or social developments in the zone for the consideration and approval of the Authority; and (i) abstain from activities, which in the opinion of the Authority may prevent, restrict or distort competition, \ A 238 2021 No. 6 Petroleum Indushy Act, 2021 Rights of the 150. Subject to the provisions of this Act, the Authority may, in order to gas facilitate the conduct of its licenced activities, grant the gas distributor the distributor. rightto- (ct) enter a premises for the purpose of reading the meters, testing and maintaining metering equipment, disconnecting customers and to remove its meters ; and (b) recover, on the basis of an invoice, costs reasonably incurred in the provision of appropriate infrastructure, subject to any conditions imposed by the Authority to both the level and structure of a distributor's charge, provided that reasonably incurred costs shall include any amount paid to the Authority as a licence fee. Conditions 151. In addition to conditions the Authority may impose under section applicable to 114 of this Act or that may be prescribed by regulation, a distribution licence agas shall be deemed to be granted subject to the distributor- distribution licence. (a) conducting its licenced activities in a safe and reliable standard in compliance with prescribed management, health and safety related regulations issued under this or any other Act; ( b) having regard to the effect of its Iicenced activities on the environment and complying with the requirements for environmental protection, management, and restoration under this Act and any law in force ; and (c) marking, maintaining and securing the boundaries of the distribution pipelines constructed or other distribution infrastructure as prescribed. Arrangements 152. A gas distributor sha!! consult stakeholders on the proposed for gas distribution development plan and any amendments within its local distribution <listri bution. zone and consider all representations received. Domestic 153.----{ 1) Subject to sections 111 and 125 of this Act, the Authority may gas upon approval of an application and payment of prescribed fees, grant and aggregation issue a qualified person a domestic gas aggregation licence. licence, (2) The duration of the domestic gas aggregation licence shall be for a period of two years eff~ctive from the date of the grant of the licence. (3) The domestic gas aggregation licence may be renewed by the Authority for further period of two years in each instance until the attainment of liquidity in the domestic gas market pursuant to the criteria of section 167 (3) of this Act, whereupon gas aggregation sha!! cease and the domestic gas aggregation licence shall be terminated by the Authority. (4) The board of domestic gas aggregator shall determine the fees for the services of the domestic gas aggregator and the fees shall be paid by the producer clients and customer clients in order to ensure self-financing of the domestic gas aggregator. Petroleum Industry Act, 2021 2021 No. 6 A239

154. The domestic gas aggregator shall- Functions of the domestic (a) support the implementation of the domestic gas delivery obligation; . gas (b) implement a natural gas management model, through which the ag.grega tor. demand and supply of natural gas for use in the strategic sectors shall be monitored; (c) operate a r10111ination and balancing mechanism for equitable curtailment of natural gas deliveries in cooperation with the Authority, whenever demand and supply expediencies require ; (d) ensure transparency of dealing behveen natural gas suppliers and wholesale customers of the strategic sectors; (e) conduct its operations in a business-like and transparent manner and shall not engage in any anti-competitive behaviour and practices; (f) abstain from activities, which in the opinion of the Authority may prevent, restrict or distort compet 1tion ; (g) establish an escrow account into which customer clients shall contribute their payments for the marketable natural gas received and from ·which the domestic gas aggregator shaH pay the producer clients for their supplies of natural gas under this Act; and (h) do other things as are necessary or incidental to the carrying out of its functions and duties under this Act.

155.-( I) 1l1e domestic gas aggregator shall be a not-for-profit company Establishment Iim ited by guarantee estab Ii shed under the Companies and Allied Matters Act. of the aggregator. (2) The company under subsection (1) shall not be a company that is Act No 3, controlled by licensees or !essees of upstream petroleum operations or by 2020. who !esale customers or is an affiliate of such entities, provided that ownership of the company may be by a combination of licensees or lessees, wholesale customers and other interested parties, such as licensees of gas transporta:ion pipelines and gas transpm1ation networks. 156, The domestic gas aggregator shall issue a gas purchase order to Gas a producer client where a customer client requires a specific volume of purchase orders. marketable natural gas, which is included in the domestic gas demand requirement under section 173 of this Act, provided, however, that where the producer client and customer client have entered into a gas purchase and sale agreement, the domestic gas delivery obligation shall be dealt with pursuant to such agreement which may continue to use the escrow account mechanism as provided for under section 154 (g) of this Act and where such agreement is concluded under section l l O (2) of this Act, there shall be rio further involvement of the aggregator. A 240 2021 No. 6 Petroleum Industry Act, 2021 Price 157. The gas purchase order under section I 56 of this Act and the conditions escrow mechanism under 154 (g) of this Act shal! be based on the prices for ofgas purchase marketable natural gas established by the Authority under section 167 of this orders. Act. Wholesale 158.--( 1) The Authority shal I, fo Ilowing consultations with interested customers. stakeholders, issue regulations- (a) defining the class or classes of customers that shall constitute eligible wholesale customers under this Act, and (b) specifying the qualifying criteria for the classification: Provided that the regulations may be amended from time to time to facilitate the introduction ofcompetition in supply and any amendment of the regulations resulting in a change of the class of customers shall not affect the rights and obligations of parties under natural gas supply contracts entered into prior to such amendment. (2) Wholesale customers shall be entitled to secure marketable natural gas or raw gas from any wholesale gas supplier or lessee, subject to section 173 (3) of this Act Trading and 159.-(1) The Authority shall develop arrangements for the safe and settlement of efficient trading of wholesale gas, where it determines that there is need for who\esa!e fonnal arrangements for the trading of wholesale gas. gas. (2) The Authority shal !, where required, make regulations under subsection ( l) for the trading and settlement of wholesale gas in consultation with industry participants and interested stakeholders. Gas network 160,--(1) The operation of a gas transportation network shall be in code. accordance with the existing network code issued by the Government. (2) The Authority may in consultation with stakeholders in midstream and downstream gas operations modify the network code or create other network codes for common carrier operations. (3) The Authority shall make copies of the gas network code available to interested parties upon payment of prescribed fees. Access 161.--( I) A person shall be permitted access to an open access gas related to transportation pipe line or a gas transportation nenvork for the purpose of having midstream marketable natural gas transported to points of consumption subject to and downstream compliance with the prescribed tenns and conditions for access stated in the gas gas netv,rork code. operations. Petroleum Industry Act, 202 l 2021 No. 6 A241 (2) The gas network code shall set out standard terms and conditions for connection to, interconnection with access and use of the gas transportation network. (3) Where a gas transportation pipeline is isolated from the main gas transportation network, the Authority shall develop separate terms of access for the isolated gas transportation pipeline. (4) The Authority may develop special terms for third party access to a gas distribution network.

162.-(1) Where open access applies, open access to the gas Conditions transportation pipeline or gas transportation network shall be- for the provision of (a) provided on a non-discriminatory basis between system users with opcn access similar characteristics under section 116 of this Act ; in relation to gas (b) provided in respect of any available capacity, where the capacity is operations. not subject to a previous contractual commitment; (c) provided in accordance with and govemed by the terms and conditions of the network code approved by the Authority, where applicable ; (d) provided on the condition that the applicant for access is or becomes a party to and undertakes to comply with the applicable network code; and (e) subject to the pricing principles set out in section 170 of this Act. (2) Connection agreements may be entered into between- (a) gas transportation pipeline owners and gas transportation network operator; (b) a gas distributor and the gas transportation network operator, where a gas distribution network connects to the main transportation network ; or (c) a supplier and a transportation pipe line owner or transportation network operator.

163. The Authority may mediate in disputes in respect of third party Disputes access. in relation to access. 164.-{l) The Authority may,. to protect the interests of customers, issue Customer regulations requiring suppliers, gas distributors and petroleum product protection. distributors to- (a) publish their terms of supply or distribution including tariffs, other than for negotiated tariffs under section 122 (4) of this Act; (b) establish or to foe ilitate the estabiishrnent of a forum at which customers are able to express their views and raise concerns ; A 242 2021 No. 6 Petroleum Industry Act, 2021 (c) formulate and adhere to standards of performance as are, in its opinion, necessary to ensure the safety, reliability and quality of supply and distribution services to customers and set penalties, pursuant to regulations, for failure to comply; (d) prepare and submit reports to the Authority, at least on an annual basis, indicating their performance levels and status of their operations in respect of [icenced activities at such times as the Authority may by regulation or in their respective licences prescribe; and ( e) develop and adhere to customer service codes, setting out the practices and procedures to be followed in the conduct of specified licenced activities, which may include~ (i) the installation, testing, maintenance and reading of meters, (ii) fault repairs and response to customer emergencies, (iii) the connection and disconnection of customers, (iv) responding to customer complaints and complaint resolution, (v) Billing and invoicing, (vi) the extension of payment and credit facilities, (vii) the provision of information to customers and the use and pro tee tion of custom er in formation, and ( viii} the establishment of spec ia! services for econom ica I!y or socially disadvantaged customers. (2) The customer service codes shall be approved by the Authority prior to publication and may be reviewed at inte1va!s as may be considered necessary by the Authority. (3) The customer service codes shall be made available to all customers upon request and published on the website of the Authority. ( 4) The Authority shall notify or by regulation require licensees to notify customers of the customer service codes that shall be adhered to by licensees. ( 5) The Authority sha! 1, in developing customer protection regulations,- ( a) consu It with supp Iiers, gas distributors, petroleum product distributors and interested stakeholders ; and (b) take into account existing procedures, practices and standards issued by the Federal Competition and Consumer Protection Commission. Provision of 165. The Authority shall, at its discretion and at such time or times as it service to deems appropriate, designate distributors of last resort and suppliers of last customers. resort to provide services to customers--- Pelroleum Industry Ace, 202 l 2021 No. 6 A243 (a) where an existing gas distributor for a local distribution zone, a petroleum product distributor or a supplier becomes insolvent, is unable to provide Hee-need services or has had its licence suspended or revoked, (b) where the gas distributor for a local distribution zone or supplier refuses or fai Is to fu lfi I the terms of its Iicence to distribute or supply natural gas or petroleum product to customers, and ( c) in such other circumstances as the Authority may deem appropriate: Provided that, in each case, any reasonable additional costs associated with the ob Iigation to act as distributor or supplier of last resort shal I be recoverable through appropriate charging arrangements agreed,., ith the Authority.

166. Where the designation of a supplier or distributor of last resort Transfer of requires the transfer of customers from one licensee to another, the Authority customers_ sha H prepare. or require the applicable su pp Iier or distributor oflast resort to prcpare- (a) procedures to secure the effective transfer of customers; and (b) a statement of any costs reasonably incurred in undertaking the transfer, which if approved by the Authorit)~ shall be recoverable through regulated charges.

167.-(I) The Authority shall, in accordance with this section and for Natural gas each year, determine the domestic base price under the Third Schedule to this prices for the strategic Act, for the purpose of determining the prices for the power sector, commercial sectors and sector and gas based industries. gas distributors. (2) The Authority shall continue to determine the prices referred to under subsection (I), if in its opinion:, the contra l of prices for natma I gas for Third Schedule. the strategic sector is required. (3) The price control and the corresponding role of the domestic gas aggregator shall not be required, where the- (a) entire domestic gas demand requirement under section 173 {2) is covered by contracts under sections I IO (2) and l 73 (3) of this Act ; or (b) domestic market for natural gas is largely characterised by free market based contracting for natural gas between willing buyers and willing sellers, based on criteria established by the Authority in consultation with the stakeholders and at such time the provisions of subsections (41 (5). ( 6} and (7) and section 168 shall no longer be applicable and the criteria under this subsection may include that certain classes of wholesale customers, but not all, of the strategic sectors will no longer be subject to price controls as part of an ongoing process towards full free market conditions. A 244 2021 No. 6 Petroleum Jnduslry Act, 202 l (4) The aggregate gas price for a month shall be the price calculated based on the procedures established by the domestic gas aggregator on the basis of the prices determined by the Authority under subsection ( 1). (5) The price of marketable natural gas applicable to the po,ver sector shall be the domestic base price at the marketable natural gas delivery point. (6) The price of marketable natural gas applicable to the commercial sector shall be the domestic base price at the marketable na tura 1gas de livery point plus US $0.50 per MMBtu. (7) Gas distributors shall not be part of the strategic sectors and shall negotiate the supply and pricing oftheir natural gas directly, provided that the applicable price for gas distributors for the marketable natural gas at the marketable gas delivery point shall not exceed that of the commercial sector under subsection (6). (8) Where applicable, wholesale gas suppliers, the wholesale customers of the strategic sectors and gas distributors shall pay for the transportation cost of the marketable natural gas from the marketable natural gas delivery pointto the facilities of the wholesale customers. (9) The wholesale gas suppliers, wholesale customers of the strategic sectors and gas distributors shall, for the purpose of transportation, have the option to--- (a) use the gas transportation network applicable to their geographical areas; or ( b) obtain a gas transportation licence in order to transport their natural gas connecting to the gas transportation network, another existing gas transportation pipeline or directly to a marketable natural gas delivery point. ( l 0) Each producer client shall, for any month, receive from the escrow account ofthe domestic gas aggregator an amount that is equal to the aggregate gas price multiplied by the customer client volume that was paid for such producer client in such month by the customer client. Gas based 168.-( l) Subject to the provisions of section 167 (3) of this Act, the industries gas price for the gas based industries shall be determined by the pricing principles gas price. specified in the Fourth Schedule to this Act. Fourth Schedule, (2) The floor price for the gas based industries shall be US $0.90 per MMBtu. (3) The ceiling price shall be the domestic base price applicable f01 .... ny particular year. ,. Petroleum Industry Act, 2021 2021 No. 6 A 245 (4) The prices determined in the Fourth Schedule to this Act shall be Fourth prices at the marketable gas delivery point from -..vhere transport costs need to Schedule. be added for delivery to the respective gas based industries. (5) The Authority may by regulation adjust the price mechanism to add other gas based industries in line with market realities.

169.-(1) Where the Authority determines that- Power to rcgulmc and (a) a particular licenced activity is a monopoly sen ice, 1 review (b) competition has not yet developed in the market to such fill e)..ient as prices. to protect the interests of customers, or ( c) a particu Jar Iicensee is a dominant provider, the Authority shall regulate the prices charged by licensees in respect of the activities, in a manner consistent with its functions underthisAct and with the pricing principles set out in section 170 of this Act. (2) The Authority shall undertake periodic pricing methodology reviev..·s, provided that the pricing methodology review shal! not affect arrangements entered into or approvals given for the development of a gas infrastructure or utilisation project prior to the effective date. ( 3) The Authority shal I consu it with Iicensees, industry participants and stakeholders before undertaking a pricing review or establishing a methodology for regulating prices and revenues earned by Iicensees providing monopoly or dominant services.

170. Subject to the provisions of this Chapter, the Authority shall, in the Pricing exercise of its powers to regulate prices charged by licensees, be guided by principles the fullowing principles- in relation to gas. (a) marketable natural gas prices shall be disaggregated into the component elements of the supp ty chain including the costs of wholesale gas, tariffs for gas processing, tariffs for transportation pipelines for natural gas, distribution and supply; (b) the prices charged for each licenced activity shall reflect the costs incurred in the efficient provision of that activity; (c) prices charged shall permit a reasonable return for licensees on their investments ; and (d) prices shall not discriminate between customers with similar characteristics, such as similar size or a similar consumption profile. A 246 2021 No. 6 Petroleum h1dus/Jy Act, 2021 Public 171. The Authority may issue regulations imposing public service scn"ice obligations on licensees in relation to matters including- obligations related to (a) security of supply; policy issues. (b) economic development and the achievement of wider economic po 1icy objectives ; (c) environmental protection; and (d) health and safety. Public 172.-( I) The Authority shall, by regulation, provide for the recovery of service lc\'y. any additional costs incurred in complying with the public service obligations through a public service levy, which may be imposed on customers, provided that it would, in the opinion of the Authority, be in the \Vider public interest. (2) The amount of, and mechanism for the co Ilection and remittance of, the public service levy imposed on each customer shall be set out in the regulations contemplated by subsection ( 1). Domestic 173.--{l) The Authority shall, prior to the 1st of March of each calendar gas demand year, determine the domestic gas demand requirement and inform the requirement. Commission of this requirement. (2) Subject to subsection (3), the domestic gas demand requirement sha!l be the total amount of marketable natural gas required for all wholesale customers of the strategic sectors. (3) Each wholesale customer of the strategic sectors shall have the right to negotiate its own supply contracts directly with lessees or suppliers and where the wholesale customer is of the view that the contracts are satisfactory for its requirements, it sha !I inform the~ (a) Authority that there is no need to be a customer client of the domestic gas aggregator : and (b) Commission of the lessees from which the required marketable natural gas has been obtnined. PART V~Amn;,.;isTR.\TJO~ OF !\1mSTRE.\.\1 .'1;,..'D Do"'"NSTRL\:-vf PET ... 0u:t.i:.1 L1Qums OrE;vmor-.:s Actidties 17 4 .-( I) Except in accordance with an appropriate Iicence i ss us:d requiring a the Authority, a person shaJ! not undertake the following activities with resr·c : lic::ncefor midstream to midstream petroleum liquids operations- and (a) establish, construct or operat:; a tenninal or other facility for '.I,..: downstream export or importation of crude oil or petroleum product, petroleum liquids (b) establish, construct or operate a crude oil refiner: . operations. Petroleum Industry Act, 202 l 2021 No. 6 A247 (c) establish, constructor operate a pipeline for the bulk transportation of petroleum liquids; (d) engage in bulk transportation of petroleum liquids by rail, barge or other means within Nigeria; (e) establish, construct or operate a facility for the bulk storage of petroleum liquids ; (f) establish, construct or operate a petroleum liquids transportation network; (g) engage in the bulk sale of petroleum liquids; or (h) undertake construction or operation of any facility for the production of lubricants or petrochemicals based on petroleum products. (2) Except in accordance with an appropriate licence or permit issued by the Authority, a person shall not undertake the foHowing activities with respect to downstream petroleum products operations- (a) construct or operate any facility for the distribution or sale of petroleum products to retail customers; ( b) establish, construct or operate a depot for the storage of petroleum products ; or (c) undertake distribution, marketing or retail trading of petroleum products. (3) The Authority may, by regulation, prescribe additional activities to be undertaken only on the basis of a licence or permit and shaH have power to issue licences or permits for the activities in accordance with this Act. (4) Where a person engages in any of the activities set out in subsection (I), (2) or (3) without a licence or permit, the Authority shall- (a) seal the premises where the activity is undertaken ; (b) dismantle and seize the facilities by which the activities were undertaken ; (c) confiscate equipment or materials employed by the person in such activity ; or (d) impose penalties as prescribed by regulations under this Act. (5) Notwithstanding any provision of this Act, a person who engages in any of the activities set out in subsection (l), (2) or (3) without a licence or permit, commits an offence and is liable on conviction to imprisonment for a term of- (a) one year or to a fine prescribed by regulation, in the case of an activity requiring a licence; or A 248 2021 No. 6 Petroleum Indushy Act, 2021 (b) six months or to a fine prescribed by regulation, in the case of an activity requiring a permit. (6) A holder of a subsisting lease, licence or permit who is engaged in activities in midstream or downstream petroleum liquids operations prior to the effective date s ha II, with in 18 months from the effective date, app !y to the Authority for, and the Authority may issue the appropriate licence or permit, where applicable. (7) The provisions of subsections (4) and (5) shall not apply to any person under subsection (6) until the Authority has considered the application and given a decision. (8) Where any person, in applying for a licence or permit, knowingly makes a false or misleading stateme11t, the Authority may- (a) suspend or revoke the licence or permit; or (b) impose a fine on the licensee or permit holder on the basis of the false or misleading information. (9) Crude handling agreements and any other agreements among parties entered into prior to the effective date related to midstream or downstream operations shall be submitted for review to the Authority and the Commission and where so ordered by the Authority or Commission, as the case may be, amendments shal I be made in such agreements to comply with the Act. Special 175. In addition to any matter provided under section 113 of this Act, regulations the Authority may issue regulations with respect to midstream and downstream for petroleum liquids operations, which shall include-- midstream and (a) the establishment and operation of a wholesale market. to ensure the dO\\ nstrcam continuity of supply of petroleum products to customers, that will apply to petroleum liquids the owners and operators of crude oil refineries, transpo11ation pipelines operations. and other facilities or vessels for the bulk transprntation of petroleum liquids, bulk storage facilities for petroleum liquids and terminals and outlets for retail trading of petroleum products; and ( b) matters ancillary to or consequent ia I on the activities set out in paragraph (a). Rights of 176. Subject to applicable law and the terms and conditions prescribed way relating by the Authority, a licensee or permit holder is entitled to rights of way for the to midstream laying, operation and maintenance of petroleum liquids transportation pipelines, and dO\\ nstream communication lines, power lines and other similar lines through or across the petroleum areas the licensee or permit holder may require for carrying on midstream or liquids dov,mtream petroleum liquids operations u ndcr the licence or permit. operations. Petroleum lnd11st1y Act, 202 l 2021 No. 6 A249

177. The Authority may for the purpose of efficiency, preserve rights Surface of way, easements or other rights over any surface or seabed areas subject to rights reserws for an existing licence or permit, which may be necessary for the laying, operation the and maintenance of petroleum liquids transportation pipelines, communication Authority lines, power lines and other similar lines and any right of way or other rights for reserved shall continue for the benefit of any entity to whom the Authority midstream may subsequently grant the same for a licence or permit and dO\\ nstream petroleum liquids operations, 178,-(l) The Authority may in consultation with licensees and other Petroleum stakeholders with respect to midstream petroleum liquids operations, develop liquids · a network code governing the terms of access into facilities and infrastructure midstream net\rnrk used in midstream petroleum liquids operations. code. (2) The network code may include the following matters- (a) a connection and interc01mection policy, standardten11S for connection to an open access petroleum liquids transportation pipeline or petroleum liquids transportation network and a statement of the connection charging methodology; (b) a mechanism by which users reserve capacity in facilities and infrastructure and at any time there is a greater demand for access than available capacity, a mechanism for allocating capacity between users; (c) ~he nomination; (d) requirements for the provision of infon11ation to the petroleum liquids transportation network operator about the volume, timing and flow-rate of injections into and withdrawals from the petroleum liquids transportation network; (e) the structure of charges and the applicable tariffs charged for using the petroleum liquids transpo1tation network; (f) the balancing of crude oil, condensates or petroleum products being conveyed; (g) registration arrangements ; (h) metering, allocation and settlement arrangements ; (0 governance aJTangements; and (;) the maintenance of a register of customers and suppliers. (3) The petroleum liquids midstream network code shall be published on the website of the Authority and physical copies shall be made available to interested persons on payment of a prescribed fee. A 250 2021 No. 6 Petroleum Industry Act, 2021 Third party 179 .-( I) Subject to section 162 of this Act, any person licenced under access the provisions of this Act to supply petroleum liquids shall be permitted third relating to midstream party access to facilities and infrastructure used for midstream petroleum and operation by owners, operating on their own account, of such facilities and downstream infrastructure- petroleum liquids (a) in the manner pr.escribed by this Act, the regulations, codes and operations. other guidelines issued by the Authority under this Act ; and (b) on commercially viable terms based on a cost reflective pricing methodology. (2) The Authority may mediate in disputes related to third party access. Conditions 180.-(l) Where open access applies, open access to the facilities and for the infrastructure used with respect to midstream petroleum liquids operations provision of shall be- · open access in re!ati on to (a) undertaken on a non-discriminatory basis between system users petroleum with similar characteristics under section 116 of this Act, liquids operations. (b) provided in respect of any available capacity, where the capacity is not subject to a previous contractual commitment, ( c) provided in accordance with and governed by the terms and conditions of the network code approved by the Authority, where applicable, (d) provided on the condition that the applicant for access is or becomes a party to and undertakes to comply with the applicable network code, and (e) subject to the pricing principles set out in section 207 of this Act: Provided that facilities and infrastructure which are specifically defined by the Authority for the storage of national strategic stocks shall be exempt from the provisions of this Act relating to open· access. (2) The Authority may mediate in disputes in respect of open access, National 181. The Authority shall- strategic stocks. (a) establish, administer and ensure the storage and distribution of the national strategic stocks of petroleum products in accordance with regulations issued by the Authority; (b) determine and publish the amount to be charged as a levy for the financing of the national strategic stocks, which shaU form part of the retail price of each petroleum product, such levy to be determined as a percentage of the retail price and be deducted on wholesale basis ; and (c) designate, in consultation with the appropriate authorities and national security agencies, the strategic locations across the country \Yhere the national strategic stocks shall be distributed and maintained. Petroleum Industry Act, 2021 2021 No. 6 A 251

182. The Authority shall ensure that all companies with a licence for the Operating bulk storage of petroleum products granted under section 187 of this Act stock. maintain operating stocks in accordance with guidelines published by the Authority.

183.-( I) Subject to sections 111 and 174 of this Act and upon the Grant ofa approval of the Authority of an application and payment of a prescribed fee by crude oil refining a qua! ified person, the Minister may, on the recommendation of the Authority, licence. grant and issue to that person a crude oil refining licence which shall permit the licensee to- (a) procure, construct, install and operate facilities to process crude oil on its own account into derivative chemicals and petroleum products; and (b) se\! such chemicals and petroleum products at the exit of the refinery. (2) In considering an application for a crude oil refining licence, the Authority shall take into account the economic case for a refinery, including the potential demand for its use.

184. The crude oil refiner shall undertake the activities contemplated Genera! by the licence in a manner that best complies with the following general duties of a crude oi! obligations, to- refmer. (a) procure, construct, install, operate and maintain its refinery and associated facilities in an economical, safe, reliable and environmentally friendly manner ; (b) shut down its facilities in emergencies and in order to carry out maintenance or in accordance with curtailment directives issued by the Authority; (c) manage its facilities as a reasonable and prudent open1tor ; (d) avoid any act or omission that may affect the compatibility of the refinery with any facility or net,vork that is iikely to prejudice the public interest or the integrity of network operations ; (e) produce petro !eum products to a quality suitable for the transportation system as specified in the licence; (f) produce petroleum products to a quality suitable for use in accordance to the specifications approved by the Authority ; (g) treat all customers in a non-discriminatory manner under section 116 of this Act : and (h) abstain from activities, which in the opinion of the Authority may prevent, restrict or distort competition. A 252 2021 No. 6 Petroleum lndusfly Act, 2021 Access 185. A crude oil refiner shall have the right of access to facilities, rights. including harbours, jetties, petroleum bulk storage, transportation facilities and pumping installations in accordance with the open access or third party access requirements ·and the tariff methodology approved by the Authority. Conditions 186. In addition to conditions as may be imposed by the Authority undtr applicable section 114 of this Act, a crude oil refining licence shall be deemed to be to a crude granted subject to the conditions that the holder shal I~ oil refining licence. (a) conduct its Iicenced ac ti vitics safe1y and re Iiab ly in camp l ian ce with any law in force and prescribed health and safety related regulations, standards and operating procedures issued under this Act; ( b) have regard to the effect of its Iicenced activities on the e11 v ironmen t and complying with the requirements for environmental protection, management and restoration lmder this Act; (c) mark, maintain and secure the boundaries of i1s facilities and associated infrastructure constructed under the terms of its licence and any law in force ; and (d) comply with any conditiots precedent or other conditions as the Authority may prescribe by regulation. ,, Grant of a 187 .---( 1) Sl1bject to sections 111 and 174 of this Act, the Authority bulk may upon approval of an application and payment of prescribed fees, grant petroleum and issue a qualified person bulk petroleum liquids storage lic:!nce authorising liquids storage the holder to undertake the bulk storage of petroleum liquid., whether for its licence. own account or on behalf of customers as provided for in th;: Iicence. (2) In considering an application for a bulk petroleun! liquids storage licence, the Authority shall take into account the economic case for bulk storage foci Ii ty, inc l ud ing the patent ial demand for its use. General 188. The holder of a bulk petroleum liquids storage licence shall undertake duties ofa the activities contemplated by the licence in a manner that best complies with bulk storage the fol lowing genernl obligations, to- licensee. (a) establish and make availabl~ to the public at its offices, the- (i) procedure for obtaining third party access or ::ipen access, as provided for in the licence, throughput and terminating its services, and (ii) method of response to the request for its service; (b) procllre, constmct, install, operate and maintain its facilities in a safe, economical, reliable and environmentally friendly mannerta'cing into account nny strategic plans formulated by the Authority; (c) shut down its facilities in emergencies and in order to carry out maintenance or in response to cmtai!ment directives issued !:y the Authority; Petroleum Industry Act, 2021 2021 No. 6 A 253 (d) grant third party access to use or have access to spare capacity \V ith in its foci !ities for the purpose of ensuring competitive supply of crude oil and petroleum products, where the licensee operates on its own account ; (e) consult with the Authority and obtain written permission prio; to any modification of technical and operational ru \es of practice concerning tbe operation ofits facilities; (f) conduct its !icenced activities in a non-discriminatory manner between all classes of customers under section 1I 6 of this Act, where the licence is for bulk storage for customers and is operated on an open access basis; (g) manage its facilities as a reasonable and prudent operator; and (h) abstain from activities, w-hich in the opinion or' the Authority may prevent, restrict or distort competition.

189. In addition to conditions as may be imposed by the Authority under Conditions section 114 of this Act, a bulk petroleum liquids storage licence shall be deemed applicable to be granted subject to the conditions that the holder s ha l! - to a bulk petroleum (a) where the licence is operated for the O\Vll account of the licensee, liquids the licensee may own the petroleum liquids contained in the storage and storage licence. where the licence is operated on an open access bas is the Ii censee sha 11 not own the petroleum liquids; (b) conduct its !icenced activities safely and rel iab!y in compliance with any lnw in force and prescribed health and safety related regulations issued under this Act ; (c) have regard to the effect of its Iicenced ac tiv it ies on the environment and complying with the requirements for environmental protection, management and restoration under this Act : and (d) mark, maintain and secure the boundaries of its facilities and associated infrastructure constructed under the terms of its licence and any law in force. 190.-{ 1) Subject to sections 111 and 17 4 of this Act, the Authority Grant of may upon approval of an application and payment of prescribed fees, grant petroleum liquids and issue a qua] ified person a petroleum liquids transpo11ation pipeline licence trunspormtion \Vith the exclusive right to own, construct, operate and maintain a transportation pipeline pipe line for the bulk transportation of petro !emu liquids with in a route as defined licence. in the licence for its own account \Vith third party access provisions or as common carrier as stipulated in the licence. (2) In considering an a pp Ii cation for a petrn leu m Iiq u ids transportation pipe 1ine Iicence, the Authority shaU take into account the economic case for a petroleum liquids transp011ati011 pipeline including the potential demand for its use. A 254 2021 No. 6 Petroleum Industry Act, 2021 General 191. The holder of a petroleum liquids transportation pipeline licence duties ofa shall undertake the activities contemplated by the licence in a manner that petroleum liquids best complies with the following general obligations- transportation (a) establish and make available to the public at its offices, the-". pipeline owner. U) procedure for obtaining and terminating transmission find interconnection services, and (ii) method of response to the request for its service; (b) construct, operate and maintain its petroleum liquids transportation pipeline in a safe, economical, and reliable manner taking into account any strategic plans formulated by the Authority; (c) manage supply shortfalls and meet on a reasonable endeavours basis requests for transportation above contractual volumes ; (cl) shut down its petroleum liquids transportation pipeline in emergencies and in order to carry out maintenance or in response to curtailment directives issued by the Authority; (e) provide access on a non.discriminatory basis under section 116 of this Act, where the licence is granted on a common carrier basis and provide for third party access pursuant to the Iicence conditions where the transportation pipeline is operated for the own account of the licensee; (f) consu 1t with the Authority and obtain written permission prior to any modification of technical and operational rules of practice concerning the operation of its pipeline; (g) manage its transportation pipeline as a reasonable and prudent operator ; and (h) abstain from activities, which in the opinion of the Authority may prevent, restrict or distort competition. Conditions 192. In addition to conditions as may be imposed by the Authority under npplicab le to section I 14 of this Act, a transportation pipeline licence shall be deemed to be a petroleum granted subject to the conditions that the holder shall- liquids transportation (a) not own petroleum liquids in the pipeline, where the licence is issued pipeline on a common carrier basis ; licence. (b) where the holder is a licensee operating on its own account, who is a company \.Vhich is an affiliate of a company that is a lessee, the licensee may own, or the affiliate may own, the petroleum liquids in a petroleum liquids transpo11ation pipeline for the purpose of removing petroleum liquids from the lease ; (c) where the holder is a company that also holds a licence to be a wholesale petroleum liquids supplier, operating on its own account, may own the Petroleum Industry Act, 2021 2021 No. 6 A 255 petroleum liquids in a petroleum liquids transportation pipe line, for the purpose of connecting to a lessee or wholesale customer to or from a petroleum liquids transportation network or petroleum liquids transportation pipeline, subject to third party access provisions as may be included in the licence; (J) where the holder is a company that also lto!ds 1icence as a petroleum product distributor, operating on its own account, may own the petrokum Iiqu ids in a petroleum Iiq u ids transportation pipe! ine, where the principal user of the transportation pipeline is the petroleum product distributor, sut~ ec t to third party access provisions as may be incbded in the licence ; (e) where the holder is a company that also ho Ids a Iicence to be a wholesale petroleum liquids supplier, operating on its own account, may own the petroleum Iiquids in a petroleum liquids transportation pipeline, for the piirposc: of connecting to a lessee or wholesale customer to or from a petroleum liquids transportation network or petroleum liquids transportation pipeline, subject to third party access provisions as may be included in the licence; (/) conduct its Iicenced ac tivi ties safely and re Iiab ly in compliance , vith any law in force and prescribed health and safety related regulations isrned under this Act; (g) have regard to the effect of its Iicenced activities on the environment and comply with the requirements for environmental protect:on, management, and restoration under this Act ; and (h) mark, maintain and secure the boundaries of the pipelines and associated infrastmcture constructed under th ~ ·terms of its licence. 193.--( I) Subject to sections 111 and 174 of this Act, the Authority may Grant ofn upon approval of an application and payment of prescribed fees, grant and petroleum issue a qualified person a petroleum liquids transportation network opcr1tor liquids t ranspo rtat ion licence authorising the conduct of activities specified in the licence, which netl\"ork shall include~ operator licence. (a) conveyance of petroleum Iiq uids"through the transportation network ; (b) balancingthc inputs and off takes from 1he transportation network; (c) providing open access to the transportation network; and · (cl) charging for the use of the transportation network. (2) The Authority shall grant on !y one petrc le um Iiquids transporta~ion nehvork operator licence for specified petroleum lic_uids within a geographically defined area to a single network operator, provided that the Authority may, at its discretion, issue licences to other parties for the operation of isolated or dedicated pipelines. A 256 2021 No. 6 Petroleum lndush)' Act, 202 l General 194. The petroleum Ii quids trahsportation network operator shall exercise duties ofa the rights and obligations imposed on it in a manner that best complies with the petroleum liquids following general obligations- transportation (o) establish and make available to the public at its offi:es, the- network operator. ( i) procedure, terms and conditions for obtaining and tenninating access and interconnection services to the transportation network, and (ii) method of response to the request for its service ; (b) operate an efficient and economical transportation network for the safe and reliable conveyance of specified petroleum liquids in a manner that is designed to meet all reasonable demands for the specified petroleum liquids; (c) operate a nomination and talancing mechanism a 1d an equitable curtailmellt oftransportation whenever technical or operational expediencies reqqire; (d) consult with the Authority and obtain written pennission prior to any modification of technical and operational rules of practic~ concerning the operation of its transportation network ; ( e) ensure the development and operation of a network code and terms for access into the transportation network in collaboration with the Autf1ority, shippers, licensees and permit holders operating essential :nfrastructure; (f) ensure equitable and transparent open access, subject to the provisions of section 116, to the transportation network in accordance with the network code; l (g) manage the transportation network as a reasonable and prudent operator; (h) abstain from activities, which in the opinion of the Authority may prevent, restrict or distort competition; and (i) enter into agreements with transportation pipeline owners, distributors and wholesale customers for connection to, and operation of, the transportation network. PmYers ofa 195. Subject to this Act, the Authority may grant the fc Hawing special petroleum powers or authority to a petroleum liquids transpoitation network operator to liquids faci Iitate the conduct of its licenced act iv ities- transportation network ( a) the power to request and obtain from shippers infor nation required operator. to operate the nominations and balancing mechanism to operate the network or to facilitate competition ; (b) the right to recover, on the blsis of an invoice, expe1ses reasonably incurred in undertaking its licenccd activities, subject to any conditions Petroleum Industry Act, 2021 2021 No. 6 A257 imposed by the Authority with respect to the level and structure of its charges ; and (c) to purchase petroleum liquids for its own operations for purposes such as testing and commissioning of facilities, compression purposes and line fill. 196.--(l) In addition to such conditions as may be imposed by the Conditions Authority under section 114 of this Act, a petroleum liquids transportation applicable to network operator licence may include an obligation to develop market rules in a petroleum liquids accordance with the provisions of this Act. transportation network (2) A petroleum liquids transportation network operator may be owner operator of any or all of the petroleum liquids transportation pipelines in the petroleum licence. liquids transportation network. (3) Where third parties are owners of certain petroleum liquids transportation pipelines in the petroleum liquids transportation network, the owners shall be paid by petroleum liquids transportation network operator the tariffs determined for non~operating owners of the pipelines. (4) A petroleum liquids transportation network operator shall not misuse its monopoly position in the geographical area to charge franchise or other access charges for providing access to the petroleum liquids transport network other than the charges specifica\ !y penn itted under this Act and its regulations. 197.--(1) Subject to sections 111 and 174 of this Act, the Authority may Grant ofa upon approval of an application and payment of prescribed fees, grant and wholesale issue a qualified person a wholesale petroleum liquids supply licence. petroleum liquids (2) A company that is a lessee producing crude oil or condensates or supply both or is a holder of a crude oil refining licence is a qualified person for the licence. purpose of subsection (1) and shaft be entitled to apply for and be issued a wholesale petroleum liquids supply licence by the Authority. (3) A wholesale petroleum liquids supply licence authorises the supplier to se Uand deliver petroleum liquids to bulk customers in Nigeria or for export.

198. A wholesale petroleum liquids supplier shall undertake the activities General contemplated by the licence in a manner that best complies with the following duties ofa wholesale general obligations, to- petroleum (a) provide a reliable supply of petroleum liquids to purchasers on request, liquids provided that it is economically feasible; and supplier. ( b) abstain from activities, which in the opinion of the Authority may prevent, restrict or distort competition. A 258 2021 No. 6 Petroleum Industry Act, 2021 Rights ofa 199. Subject to this Act, the Authority may grant the following specific wholesale powers or authority to the holder of a wholesale petroleum liquids supply petroleum liquids licence to facilitate the conduct of its licenced activities, the rightto- supplier. (a) terminate wholesale supply to a customer in the event of non- payment, following a notice period as prescribed by regulation; (b) recover from a customer, on the basis of an invoice and subject to any conditions imposed by the Authority on the level and structure of a licensee's c barges and costs reasonably incurred in the supply of petroleum liquids, provided that the sale of petroleum liquids to customers by the wholesale petroleum liquids supplier shall be subject to the provisions of this Chapter ; and (c) enter a premises, in accordance with a metering code issued by the Authority, for the purpose of reading the meters, testing, maintaining metering equipment, disconnecting customers and to remove meters. Conditions 200.-( 1) In addition to conditions as may be imposed by the Authority applicable under section J14 of this Act, a wholesale petroleum liquids supply licence [O a shall be deemed to be granted subject to the supplier- wholesale petroleum (a) ensuring a reliable and efficient supply of petroleum liquids to liquids customers on request, provided that it is economically feasible ; supply licence. (b) supplying petroleum liquids on request to a customer who is wi Iling and able to pay for connection to the transp01tation network ortransportation pipeline, subject to safety and network capacity constraints; and (c) conducting licenced activities safely, reliably and in an environmentally friendly manner in compliance with any law in force and any health and safety related regulations issued by the Authority under this or any other Act. (2) A wholesale petroleum liquids supplier shall undertake its licenced activities in a manner that best complies with the covenants and conditions of the licence and with customer protection measures approved by the Authority. Grant of 201. Subject to sections 111 and 174 of this Act, the Authority may upon licence for approval of an application and payment of prescribed fees, grant and issue a distribution qualified person a petroleum product distribution licence. of petroleum products. General 202. In addition to conditions the Authority may impose under section duties of l l 4 of this Act or that may be prescribed by regulation, a petroleum product petroleum product distribution licence shall be deemed to be granted subject to the duty of the distributor. bolder to-- Petroleum lndl!stry Act, 202 ! 2021 No. 6 A 259 (c1) develop and maintain a safe, efficient, reliable and economical service for the distribution of petroleum products to individual customers and petroleum product retailers; (b) carry on its business in a manner thatwil! promote competition and avoid monopoly in the retail supply of petroleum products in Nigeria; (c) conduct its licenced activities safely and reliably in compliance with any law in force and prescribed env rromnental, hea Ith and safety regulations issued under this or any other Act; (d) publish the prices to be charged and to be paid by a person to whom the distributor seUs petroleum products in a manner to ensure adequate publicity unless the Authority prescribes otherwise; (e) avoid undue preference or discriminate as between persons or any class of persons in establishing prices; and (f) comply with customer protection measures approved by the Authority. 203.----(1) Subject to sections I 11 and 174 oftbisAct, the Authority may Grant of a upon approval of an application and payment of prescribed fees, grant and licence to issue a qualified person a petro \eum product retail Iicence authorising the holder construct and operate n to estab I ish, construct and operate a fac iI ity to be emp Joyed for retai I sale of facility for petroleum products. retail supply and (2) The Authority sha Hissue guidelines in respect of the process for the distribution establishment, construction and operation of facilities to be employed by of petro1et1m petroleum product retailers for retail sale of petroleum products. products.

204.-( I) Subject to sections l l l and 174 of this Act, the Authority may Grant of a upon approval of an application and payment of prescribed fees, grant and licence to issue a qualified person a petrochemicals production !ice nee authorising the construct and operate holder to establish, construct and operate a facility for the production of a facility for petrochemicals and sell the petrochemicals produced. the production (2) The Authority shall issue guidelines in respect of petrochemicals of production licences. petrochemicals.

205.-( I) Subject to the provisions of this section, wholesale and retail Pricing prices of petroleum products shall be based on unrestricted free market pricing regime and conditions. power to regulate (2) Where the Authority determines that a particular licenced activity is tariffs. a monopoly service or a service by an excessively dominant supplier, the Authority shall have the power to regulate the tariffs and prices charged by the respective licensee in respect of the activities i11 a manner cons is tent with the Authority's duties under this Act and with the pricing principles set out in section 207 of this Act. A 260 2021 No. 6 Petroleum Jndi,stry Act, 2021 Wholesale 206.--( I) The holder of a wholesale petroleum [iq u ids supply licence prices for and a who le sale customer sha II, subject to the provisions of this Chapter, petroleum products. negotiate the wholesale prices directly between the pm1ies on an arm's length basis, provided that the transfer price shall be transparent and reflect the transfer price between the parties. (2) The Authority shall have power to monitor bulk sale of petroleum products and may publish market~based prices in order to ensure that the transactions are undertaken in a manner that transfer pricing between the supplier and the wholesale customer are undertaken at a transparent arm's length basis. (3) The supplier shall, within 14 days of the consummutio'.1 ofa transaction relating to the bulk sale of petroleum products, provide the Authority with information relating to the transaction including, where applicable, the cost incurred by the supplier in the production or supply of the product and other information relevant to the price at" h ich the product is sold. (4) A supplier who knowingly provides information, which is false or misleading with respect to the information required in subsection (3) is liable to a fine stipulated by the Authority in regulations. Pricing 207. Where under section 205 (2) of this Act, the Authority regulates principles in the tariffs and prices of a licensee, the Authority shall allow the se!ler to relation to petroleum recover reasonably and prudently incurred costs, including a r:asonable return products. on the capital invested in the business. Publiention 208. Licensees shall publish prices as required by th1~ Authority in a of prices. manner that ensures that the customers are able to identify and calcti\ate the extent of charges for which they will become Ii able. PART VI-OTHER MATTERS RELATED TO MIDSTREAM AND DOWNSTREAM OPERATIONS Public 209. The Authority may issue regulations imposing public service serYice obligations on ticensees or a class of licensees. in relation to :he r'naintenance obligations of strategic stock for which the Authority sh au· approve a tariff to be paid by the consumers. Competition 210. The Authority sha 11, subject to tbe provisions of the Federal and market Competition and Consumer Protectic n Act, have the respons '.bi lity to- regulation. (a) monitor the state of the markets regulated by the Authority; .Act Nol.

2018. (b) administer, monitor and ensure compliance with t:1e provisions of this Act and any law or regulation issued in respect of competition and market regulation ; Petroleum Industry Act, 2021 2021 No. 6 A 261 (c) monitor market behaviour including the development and maintenance of competitive markets; (d) arrest situations of abuse of dominant power and restrictive business practices; (e) assess whether the petroleum industry is operating efficiently or the existing market arrangements may constitute barriers to eney into the market for new market participants; (f) determine whether there is any anti~cotnpetitive activity being carried on and exercise its powers under this section to prevent the continuance of the activity ; and (g) determine any pre~conditions and any transitional arrangements required for any services to be offered competitively.

211.-( l) Subject to the provisions of the Federal Competition and Power to Consumer Protection Act, the Authority shall have the responsibi !ity to prevent pre\·ent ant\- anti~competitive behaviour with respect to midstream and downstream competitiYe petroleum operations and may take any or a combination of the following behaviour. actions- Act No 1. (a) monitor and determine whether a11y conduct by a licensee or any 201B. other person operating or intending to operate in midstream and downstream petroleum operations- (i) has the pmpose or effect of substantially Iessen ing com petition in any segment of the midstream and downstream petroleum operations, (ii) may likely result in anti-competitive or discriminatory conduct, including an unlawful exercise of market power that may prevent c11stomers from obtaining the benefits of a properly functioning and competitive market, (iii) may amount to practices which reflect an apparent or probable effect of crippling, excluding or deterring the entry of another person into midstream and downstream petroleum operations, or ( iv) may likely be indicative of an abuse of dominant pas ition in respect of the provision of any service; (b) consider how best to prevent or mitigate abuse of market power in its decisions and determinations regarding matters including licence applications, grant oflicence, Hee nee terms and conditions and the regulation of prices for services in competitive markets ; and (c) where, in the opinion of the Authority there is or may be, anti- competitive behaviour and ill particular an abuse of market power, the Authority shall- A 262 2021 No. 6 Petroleum Jndusfly Act, 2021 (i) issue "cease and desist" orders as may be required, (ii) i:equire and compel the disclosure of information from licensees, (iii) undertake inquiries and inv~sJ:igations, and ~ (iv) levy fines prescribed by regulations issued by the Authority, which shall not exceed 5% of the annual turnover of the company for the preceding year. (2) Notwithstanding the provisions of this section, where the Authority deems it to be in national interest or necessary to preserve or promote the benefits of a functional and effective competitive market, the Authority may, on the app Iicati on by a licensee or other person with the ab i1ity to influence the price of petroleum products,- ( a) give written approval to the app !ication upon such tenns and conditions and impose other requirements as it may deem appropriate; and (b) issue directions to prevent or mitigate any conduct that sha!I or is likely to lead to the unlawful exercise of market power that will prevent customers from obtaining the benefits of a properly functioning and competitive market. (3) The A uthotity may at any time withdraw an approval granted under subsection (2) u:pon such terms and conditions as it may deem appropriate. Separation 212.--------( 1) The Authority may require the holder of a Iicence to maintain of certain separation in management, accounting or legal entities of its licenced or !icenced permitted activities, which may prohibit the holder of the licence from directly actiYities. holding licences of another type. (2) Licenced activities between a holder of a licence and an affiliate shall be undertaken in a manner that the transfer pricing benveen both entities is undertaken on a transparent arm's length basis and in a manner that reflects the pricing principles contained in sections 170 and 207 of this Act. (3) A holder of a licence shall not, without the prior written consent of the Authority, directly or indirectly acquire an interest in, purchase or merge with another holder of a licence or an affiliate of a holder of a licence. Non- 213. A holder of a licence or permit shall not discriminate between discriminatioa customers or classes of customers or their related undertakings or network among users in respect of access, tariffs, prices, conditions or standards of service customers. under section 116 of this Act. Petroleum Industry Act. 2021 2021 No. 6 A263

214. In the exercise of its powers under this Chapter, the Authority may Considerations c011sider- for exercise of the (a) the relevant economic market; Authority's (b) global trends in the relevant economic market; powers. (c) the effect on the number of competitors in the market and their respective market shares ; (d) the effect of barriers to entry into the market; ( e) the effect of any activity on the range of services in the market ; (f) the effect of the conduct on the cost and profit structures in the market; (g) the ability of any independent licensee or operator to make price or tariff regu la:ting decisions ; and (h) any other matter which the Authority may deem relevant.

215.-(1) Where, in the opinion of the Authority, any act or activity Power to prohibited under this Chapter has been or is likely to be underta\(en by any ser..-e notice, person, the Authority may- issue "cease and desist" (a) serve a notice on the person, specifying the act or activity and its order. intention to issue a "cease and desist" order; ( b) direct the person to whom the notice is issued to do or not to do, the specified act or activity ; and (c) specify the time frame for compliance with the notice. (2) Where the person to whom the notice or directive issued under subsection ( l) fails to comply, the Authority may issue a ''cease and desist" order. (3) The Authority may levy a fine not exceeding 5% of the annual turnover of the company for the preceding year or revoke the licence of any person who fails to comply with a ·"cease and desist" order or a directive issued under subsection ( l ). PART VII-COMMON PROVISIONS FOR UPSTREAM, MIDSTREAM AND DOWNSTREAM PETROLEUM OPERATIONS 216.--{ l) The Commission and Authority shall consult with stakeholders Consultation prior to finalising any regulations or amendments to regulations. for regulations. (2) The stakeholders to be consulted for any particular regulation shall be lessees, licensees and pennit holders that may be impacted by the regulations and such other persons that may be interested in the subject matter of the proposed regulation. A 264 2021 No. 6 Petroleum Industry Act, 202 l (3) The Authority or Commission, as the case may be, may, in ffoalising any regulation under this section, take into consideration any submission made during the stakeholders' consultation under subsection ( l ). (4) Prior to holding the stakeholders' consultation under subsection ( l ), the Commission or Authority, as the case may be, sha\! publish in at ieast Lwo national newspapers with wide coverage and on its website, notice of~ (a) the stakeholders' consultation; (b) its invitation to lessees, licensees, permit holders and other stakeholders to participate in the stakeholders' consultation; (c) the venue and period during which the stakeholders' consultation is to be held; (d) the nature of the matter to which the stakeholders' consultation relates; (e) the matters upon which the Commission or Authority, as the case may be, would require submissions; (f) the form in which stakeholders are to make submissions on the subject matter oft he stakeholders' consultation; (g) the period of notice for the commencement of the stakeholders' consultation, which shall not be less than 2 l days; and (h) the address or addresses to which the submissions may be sent. (5) Notwithstanding the provisions of subsection (l), the Commission or Authority may, in national interest and exigency of the situation, issue a regulation without conducting a stakeholders' consultation. (6) A regulation made under subsection (5) shall be valid for not more than one year with effect from its commencement date, except it is confirmed following a stakeholders' consultation conducted in accordance with subsection (3). (7) The Commission or Authority, as the case may be, shall fix a date upon which the confirmed regulation under subsection (6) shall come into effect and cause the notice of that commencement date to be published in at least two national newspapers with wide coverage and on its website. Contravention 217,41) Where it appears to the Commission or Authority that the and holder of a lease, licence or permit is contravening, has contravened or is enforcement likely to contravene any of the conditions of the !ease, licence or permit, the of cond itlons of !cases. Commission or Authority, as the case may be, may publish a 110tice in a licences or manner as it considers appropriate to draw the attention of other persons permits affected or Iike ly to be affected by the contravention or threatened contravention where it of the lease, licence or permit- appears. Petroleum Industry Act, 2021 2021 No. 6 A265 (a) specifying the actual or potential contravention ; (b) directing the holder to do or not to do, the things specified; (c) specifying the remedy and the timefrmne for compliance ; and (d) notifying the holder of the lease, licence or permit of its intention to issue an enforcement order. (2) The holder of the lease, Iicence or permit and any other interested party shall be entitled to make representations against or in support ofa notice published under subsection ( 1) on a date specified in the notice. (3) Where a holder of the lease, licence or permit fails to comply with a notice published under subsection (I), the Commission or Authority, as the case may be, may issue an enforcement order. ( 4) The Commission or Authority may not issue an enforcement order if the holder of the lease, licence or permit- (a) is able to demonstrate to its satisfaction that it is not contravening or about to contravene a condition of a lease, Iicence or permit, or (b) has ceased to contravene a condition of the lease, licence or permit: Provided that where the earlier contravention was deli berate, the Commission or Authority, as the case may be, may, at its discretion, impose a penalty as prescribed by regulation. ( 5) A holder of a Iease, Iicence or perm it who fa i!s to camp ly with the enforcement order under this section, contravenes the provisions of this Act and is liable as follows, the- (a) Commission shall revoke the permit or recommend to the Minister to suspend or revoke the Iicence or lease ; (b) Authority shall revoke the permit or recommend to the Minister to suspend or revoke the lease, licence ; or (c) Commission or Authority, as the case may be, shall impose any other penalty prescribed by regulations. ( 6) The penalty issued under subsection (5) may be reviewed in regulation, in order to reflect the effect of inflation or for other j usti tied reasons. (7) The Commission or Authority, as the case may be, may order the sealing up of any premises, including any facility or plant engaged in petroleum operations, where there has been a contravention of this Act or any regulation. (8) Subject to any other provisions in this Act, any dispute between a lessee, licensee or permit holder and the Commission or the Authority shall be settled by the Federal High Court. A 266 2021 No. 6 Petroleum Industry Act, 2021 Mandatory 218. A person engaged in petroleum operations, which require a lease, registration. I icence or perm it by the Commission or Authority under this Act, shal I register its undertaking with the Commission or Authority, as the case may be and provide information concerning the activities of the undeJtakings as may be prescribed in regulations. Register of 219 .-(I) The Commission and Authority sha! I estab I ish, maintain and licences. make publicly available, a register ofleases, licences, pennits and authorisations, permits and issued, revoked, suspended, surrendered or withdrawn and any modification authorisations. or exemption granted in respect of any lease, Iice nee, permit or authorisation under this Act. (2) The officer registering the issuance of any instrument as provided under subsection (I) shall require an acknowledgement of the receipt of a copy of such instrument from the person receiving it in such form as may be prescribed by regulation. (3) A license or pe1mit issued under this Act shall be conspicuously exhibited by a licensee or permit holder in a prominent place on the business premises of the Iicensee or perm it h olde1: Preparation 220.-(l) A lease, licence, permit or authorisation and any exemption of leases, granted under this Act shal I be prepared in duplicate, one copy shal ! be de! ivered licences, to the holder of the lease, licence, permit or authorisation and the other copy permits and to be retained by the Commission or Authority which shall be bound up in a authorisations. book of the appropriate series within its register and serially numbered. (2) The register referred to in section 219 of this Act shal I also be kept in an electronic format and soft copies of individl!al leases, licences, permits, authorisations or exemptions shall be forwarded to the holder ofa lease, !icence, permit or authorisation. (3) The Commission or Authority, as the case may be, shall cause a lease, licence, permit or authorisation to be prepared upon payment of the requisite fees and in the case of !eases or licences for upstream petroleum operations the provisions of section 85 shall apply. (4) The officer registering a lease, licence, permit or authorisation or exemption under subsection (1) shall require an acknowledgement of the receipt of the copy of the lease, licence, permit or authorisation or exemption from the person accepting such lease, licence, permit or authorisation or exemption in such form as may be prescribed by regulations. Petroleum Induslly Act, 2021 2021 No. 6 A267 221.---(1) The lease, licence, permit or authorisation or any exemption Effective sha Il be authenticated under the seal of the Commission or Authority, as the date and case may be and the validity of the lease, licence, permit or authorisation or authentication of licences. any exemption shall commence from the date of its issuance. permits and (2) The date of issuance of any lease, licence, permit or authorisation or authorisations. any exemption shall be inscribed on the lease, licence, permit or authorisation or any exemption.

222.-( 1) The Commission or Authority, as the case may be, shall Registerof enter in the appropriate register a memorial of any extension, transfer, memorials and surrender, revocation, exemption, relinquishment, change of address, change interests. of name or any other matter affecting the status of or any interest in any lease, licence, permit or authorisation registered under this Chapter together with the date of such entry. (2) The Commission or Authority, as the case may be, shall establish and maintain a register in which particulars of any interest or shares transferred or assigned are recorded by the Commission or Authority and the register shall be updated in relation to any change in the status of such interest or shares transferred or assigned.

223. A lease, licence, permit or authorisation registered under this Chapter Effect of shall, subject to the provisions of this Act, be conclusive evidence- registration. (a) thatthe rights described in tile [ease, licence, permit or authorisation are vested in the person named as the holder of the lease, licence, permit or authorisation ; and (b) of the conditions and other provisions to which the holder of the lease, licence, permit or authorisation is subject under this Act. 224.-{ l) The registry and the registers required under sections 219, Public access 222 and 223 of this Act shall be readily accessible to the public during the to the registry. hours and upon the days designated by the Commission or Authority, as the case may be. (2) The Commission and Authority shall maintain an up-to-date electronic form of the registers required under sections 219, 222 and 223 of this Act on its website, which may be accessed for free by any member of the public. (3) A memberofthe public shall, upon the payment of prescribed fees, be entitled to obtain a certified true copy of any document or record contained in the registers refeffed to in sections 219, 222 and 223 of this Act. A 268 2021 No. 6 Petroleum Indushy Act, 2021 Radioactive 2:?5. The storage, application, transportation, and other petroleum materials. operations of radioactive materials and other equipment generating ionizing Cap. Nl42. radiation in all aspects of o ii and gas operations shall be in comp I iance with the LFN, 20o..t-. Nuclear Safety and Radiation Protection Act and such other legislative provisions as may be applicable. Default 226.--{1) Any matter which requires the Commission's or Authority's approvals. approval under this Act or under any regulation, shal I be approved or rejected within the time limit specified in this Act or in any regulation issued by the Commission or the Authority. (2) Where no time limit has been specified under this Act or in any applicable regulation, the time limit referred to in subsection (1) shall be 90 days. (3) Where the Commission or Authority rejects an application, they shall, within the stipulated time Hmit, revert with reasons and any rejected application shall be tracked and accurate record of it kept. ( 4) Where the Commission or Authority at the expiration ofthe stipulated time frame refuses to communicate in writing its approval or rejection to the applicant, the application is deemed to have been approved and the default approval shall be recorded in the appropriate register by the Commission or Authority. Disclosure 227.-{ l) Where a director or employee of the Commission or Authority, of in the course of his duties, acquires information relating to the financial affairs confidential or other of any person or to any commercial secret or where any other person indirectly infonnation. acquires such or other information required to be kept confidential under the provisions of this Act from any director or employee of the Commission or Authority, he shall not make use of such information for any unauthorised or unofficial purpose nor disclose it to any other person except- (a) for the purpose of legal proceedings under this Act or any other law; and (b) to the extent that it may be necessary to do so for the purpose of this Act or any other law. (2) A director or employee of the Commission or Authority shall not, for personal gain, make use ofany information acquired by him in the course of his duties within a period of five years after the date on which he ceased to be a director or employee. (3) Any person who contravenes subsection (l) commits an offence and is liable on conviction to the forfeiture of any proceeds accruing to him on account of the contravention and to a fine or other sanctions prescribed in regulation. Petroleum Jndusfly Act, 2021 2021 No. 6 A269

228.-( 1) A person shall not- Offenees. ( a) obstruct or assau !t any officer of the Commission or Authority or any person authorised by the Commission or Authority in the exercise of the powers conferred on the Commission or Authority under this Act; (b) refuse any officer of the Commission or Authority or any person authorised by the Commission or Authority, as the case may be, access to any premises, facilities or retail outlets or refuse to submit to a search of any premises, facilities or retail outlets by any authorised officer or agent of the Commission or Authority; or (c) fail to comply with any lawful demand, notice or order of an officer or authorised person of the Comrniss ion or Authority in the execution of the officer's duties under this Act. (2) A person shall not- (a) engage in any petroleum operations without a valid lease, licence or permit where such lease, licence or permit is required under this Act; (b) un Iawfu !ly remove, destroy or damage any faci Iity used for petroleum operations ; (c) furnish a statement or incomplete information calctilated to mislead or wi !fu Ily de lay or obstruct the Commission or Authority and its officers in the exercise of their duties ; · (d) obstruct or fail to cooperate with the Commission or Authority in its investigation of any suspected crime or corrupt practice; ( e) act in breach of any relevant network code, where app Iicab le to such person or in violation of this Act in relation to the allocation of available capacity, access and payment of tariffs in respect of the use of any facility or infrastructure ; or (f) use or permit its facility, infrastructure or equipment to be used for or in relation to the Commission or Authority of any offence. 229.-{ I) A person who violates the provisions of section 228 of this Penalties. Act commits an offence and is liable on conviction to a fine prescribed in regulations. (2) Where an offence has been committed under section 228 (2) (b) of this Act, the person ·who committed the offence shall discontinue the operations of the affected infrastructure, facility or equipment until any damage, alteration, malfunction or loss has been rectified and all safety issues have been resolved. (3) The Commission or Authority, as the case may be, may by reglllation, where necessary, review the amount of the penalty stipulated in subsection ( l) to reflect the effect of inflation or for other justified reasons. A 270 2021 No. 6 Petroleum Indusfly Act, 202 l Refusal to 230. A person who-------- furnish, return or (a) foils or refuses to furnish, return or supply ioformation to the supply Commission or Authority or any other !awful authority at the ti nie and in the information. manner prescribed, (b) furnishes a faise or incomplete rdurn, (c) supplies false or incomplete information, (d) wilful!y delays or obstructs the Commissioo or Authority, its officers and agents, police officers ar1d other law er1forcemer1t officers in the exercise of the powers or duties conferred or imposed on the Commission or Authority under this Act, or (e) conceals, fails or refuses, without reasonable cause, to supply info1mation required by the Commission or Authority or any duly empowered lawfu 1authority at the time and in the manner prescribed or when required to do so, commits an offence and on conviction by a court of competent jurisdiction is liable to a term of imprisonment and applicable fine as may be prescribed in regulation and with respect to paragraphs (a), (b) and (c), where such offence is repetitive or continues after having been so informed in writing by the Commission or Authority as the case may be, PO\\·er to 231.-(l) The Commission or Authority, as the case may be, may issue assess a penalty in the prescribed amount against any person for prescribed administmthe contraventions of this Act, regulations or an order made under this Act. penalties. (2) Prior to assessing a penalty, the Commission or Authority, as the case may be, shall provide notice to the person- (a) setting out the facts and circumstances that make the person liable to a penalty ; (b) specifying the amount of the penalty that is considered appropriate in the circumstances; and (c) informing the person of the person's right to make representations to the Authority or Commission, as the case may be. (3) A person to whom notice is sent under subsection (2) may make representations to the Commission or Authority, as the case may be, in respect of whether or not a penalty should be assessed and the amount of the penalty. (4) Representations under subsection (3) shall be made within 30 days after the person received the notice under subsection (2). (5) After considering any representations made under subsection (3), the Authority or Commission, as the case may be, may- Petroleum Industry Act, 2021 2021 No. 6 A 271 (a) assess a penalty and set a date by which the penalty is to be paid in full; or (b) determine that no penalty should be assessed. (6) The Authority or Commission, as the case may be, shall serve a copy of its decision under subsection (5) on the person who made the representations. 232.--( l) The decommissioning and abandonment of petroleum wells, Abandonment installations, structures, utilities, plants and pipelines for petroleum operations decommis.sicm- ing and on !and and offshore shall be conducted in accordance with- disposal. (a) good international petroleum indtlstry practice; and (b) guidelines issued by the Commission or Authority, as the case may be, provided that the guidelines shall meet the standards prescribed by the international maritime organisation on offshore petroleum installations and structmes. (2) A decommissioning and abandonment shall not take place without the written approval of the Commission or Authority, as the case rnay be. (3) The Commission or Authority, as the case may be, shall by written notice, require a lessee, licensee or permit holder to commence the decommissioning and abandonment of a well, insta! \at ion, structure, utility and pipeline, where such decommissioning and abandonment is required under good international petroleum industry practices or the guide lines. (4) In production sharing contracts or any other contractual arrangement under section 85 of this Act responsibilities and liabilities relating to decommissioning and abandonment as specified in this section and section 233 of this Act shall apply to the licensee or lessee as corHractor. (5) A licensee or lessee may by \Vritten notice inform the Commission or Authority, as the case may be, of its intention to decommission or abandon. (6) Upon a notice in subsection (5), the lessee or licensee, shall prior to any decornmissioning and abandonment, submit to the Commission or Authority, as the case may be, a progrnmrne setting out~ (a) estimate of the cost of the proposed measures; (b) details of measures proposed to be taken in connection with the sh utd own of opernt ions and decom rn iss ion ing and aban donrn~n t of disused installations, structures or other assets usep in petroleum operations as the case may be ; (c) dear descriptions ofthe methods to be employed to undertake the work program me, v.. bic h sha l1be in 1ine with good intern ation a1petroleum industry practices and environmental development; A 272 2021 No. 6 Pelroleum Industry Act, 2021 (d) steps to be taken to ensure maintenance and safeguard, where any instal !at ion, structure or pipe! ine remained disused and in position or are to be partly removed with respect to deep and ultra~deep water environment and where the installation, structure or pipeline is partly removed, the licensee or lessee shall remain llable for any residual liability arising from the insta!lation; stru_cture or pipeline not removed ; and (e) assessment of the environmental and social impact of the decommissioning and abandonment measures. (7) Installations and structures on land shall be completely removed and the environment restored to its original condition, except for buried transportation pipelines and gathering lines. (8) Except for the abandonment of wells, upon the submission of a decommissioning and abandonment programme by the licensee or lessee to the Commission or Authority, as the case may be, consultations shall be made with interested parties and other relevant public authorities and bodies. (9) The prograrilllle referred to in subsection (6) shall not be approved unless relevant environmental, technical and commercial regulations or standards are complied with. ( I 0) Prior to the approval of an a pp I icati on or programme for decommissioning and abandonment, the Commission or Authority, as the case may be, shall ensure that- (a) considerations and recommendations are taken in the light ofindividual circumstances ; ( b) the potential for reuse of a transportation pipeline together with other existing fac iIity in connection with further hydrocarbon developments is considered before decommissioning; (c) all feasible decommissioning options have been considered and a comparative assessment made ; (cl) any removal or partial removal of an installation, structure or transportation pipeline is to be performed in a manner that guarantees sustainable environmental development; and (e) any recommendation to leave an installation, structure or gathering line in place is made with regard to its likely deterioration and to the present, possible and future effects on the environment and in the case of offshore installations and structures, consistent with the applicable good international petroleum industry practices. Petroleum Indus!Jy Act, 2021 2021 No. 6 A273 (11) The Commission or Authority, as the case may be, shall enforce compliance by any holder of a current licence or !ease or a holder of an expired licence or lease who was responsi b!e for the applicable decommissioning and abandonment pla!1 with respect to a licence or lease that has exp ired, to carry out its remaining or unfu Ifi l!ed decommissioning and abandonment obligations under this Act. ( 12) In archiving and maintaining the database of installations, stnictures and assets set out in subsection ( 14) the Commission or Authority, as the case may be, shall prescribe the manner and method in which the data shall be submitted by operators. ( 13) The Commission or Authority, as the case may be, may recall a licensee or Jessee responsible for a decommissioning and abandonment programme with respect to a Iicence or lease that has exp ired or is surrenderetl or a Iicensee or lessee that has transferred ord ivested its interest or equity, to carry out an obligation under this Act, provided however that, where a new company has assnmed all respective obligations, with the approval of the Commission or Authority, upon the transfer or divestiture, the licensee or lessee shal! have no further responsibi titles. (14) The Commission or Authority, as the case may be, shall ensure that a list of the installations, structures and pipelines on land and offshore in Nigeria used for petroleum operations and their current status is compiled and made available or accessible to the public annually. 233.-{ I) Each lessee and licensee shall set up, maintain and manage Dccommission- a decommissioning and abandonment fond held by a financial institution that is i ng and not an affiliate of the lessee or licensee, in the form of an escrow account abandonment fund. accessible by the Commission or the Authority, as the case may be, under the provisions of the escrow agreement and where funds have been accrued prior to the effective date, such funds shall form part of the decommissioning and abandonment fund established under this Act. (2) The decommissioning and abandonment fund shall exclusively be used to pay for decommissioning and abandonment costs. (3) Where a lessee or a licensee fails to cornply with the decommissioning and abandonment plan, the decommissioning and abandonment fund shall be accessed by the Commission or Authority, as the case may be, to pay for the performance by a third party of sue h lessee's or licensee's obligations under section 232 of this Act, after the licensee or lessee has been informed of the non-compliance and given a reasonable period to rectify the non-compliance. A 274 2021 No. 6 Petroleum I11dus11y Act, 2021 (4) The amounts to be contributed to the decommissioning and abandonment fund shall be based on the following- ( a) with respect to upstream petroleum operations, on the decommissioning and abandomnent plan approved by the Commission in the fie Id development p Ian required by sect ion 79 (2) of this Act and where-- (i) no decommissioning and abandonment plan exists, and (ii) a field is in development or producing, the lessee shall submit a decommissioning and abandonment plan based on the criteria established in section 232 (6) of this Act within one year of the effective date, which when approved by the Commission, shall form the basis of the computation of the amount to be contributed by the lessee ~ and (b) with respect to midstream petroleum operations, on the decommissioning and abandonment !}Ian submitted under section 111 (3) of 'this Act and where no such plan exists, the licensee shall submit a decommissioning and abandonment plan to the Authority based on the criteria established in section 232 (6) of this Act within one year of the effective date, which once approved by the Authority shal I form the basis of the computation of the amount to be contributed by the licensee. (5) The decommissioning and abandonment plan shall establish the yearly amount to be contributed to the respective decommissioning and abandonment fund and the yearly amount shall be based on a reasonable estimate by the licensee or lessee of the applicable decommissioning and abandonment costs, projected forward on a nominal basis and divided by the estimated Iife of the facilities and the reasonable cost estimate shall be approved by the Commission or Authority, as the case may be. (6) The estimated life of the facilities referred to in subsection (5} shall be based on the- (a) estimated life of the fie Id, in case of facilities used for upstream petroleum operations ; and (b) period of time for which the safe operations of the facilities ,vere designed, in case of foe ilities used for midstream petroleum operations. (7) The estimated yearly contribution under subsection (5) shall be reviewed every I Oyears foll'bwing the first submission. (8) A decommissioning and abandonment fund shall be funded by the applicable licensee or lessee based on the yearly amount established in subsection {S) and as provided in a regulation. Petroleum Jnd11sr1y Acl, 20.:? l 2021 No. 6 A 275 (9) A licensee or lessee shal!- (a) inform the Commission or Aulhority, as the case m.'ty be, of the establishment of its decommissioning and abandonment fond not more than three months from the date of commencement of production for upstream petroleum operations or the commissioning of the foci !ities for midstream petroleum operations; and (b) furnish the Commission or Authority, as the case may be, on an annual basis with statements of accounts with respect to its decommissioning and abandonment fund with a copy to be provided to the Service. ( I0) Where the licensee or lessee is a party to a farm out agreement with one or more third parties, a decommissioning and abandonment plan funded in whole or in part by the applicable third parties shall be provided for in the applicable farm out agreement. (11) From the effective date, contribmions to the decommissioning and abandonment fund shall be eligible for cost recovery and shall be tax. ded uctib !e, provided that decommissioning and abandonment costs disbursed from the decommissioning and abandonment fund shn\l not be eligible for cost recovery or deductible for tax purposes. (12) Where there is excess in the decommissioning and abandonment fund after the decommissioning and abandonment has been carried out and approved by the Commission or Authority, as the case may be, the excess shall be considered income for production sharing or tax purposes and the amount after the withholding of profit oil and any tax shal 1be returned to the licensee or lessee. CHAPTER 3-HOST COMMUNJTIES DEVELOPMENT 234.---( I) The objectives of this Chapter are to-- ObjectiYes and (a) foster sustainable prosperity within host communities; regulations. (b) provide direct social and economic benefits from petroleum operations to host commllnities; (c) enhance peaceful and harmonious co.existence between licensees or lessees and host communities; and (d) create a framework to supp01i the development of host communities. (2) The Commission and Authority may make regulations with respect to this Chapter on areas with in their competence and j uri sd iction as spec itied in this Act. A 276 2021 No. 6 Petroleum Indushy Act, 2021 (3) The regulations under subsection (2) shall include a grievance mechanism to resolve disputes between settlors and host communities. ( 4) The regulations under subsection (2) shal! include the ability of the settlor to make the fol!owing adjustments to reduce expenditures where the available funds for administration under section 244 (c) of this Act are insufficient to fund the ongoing operations- (a) reduce the number of members of the Board of Trustees and frequency of meetings ; (b) not fund the reserve fund under section 244 (b) and not hire the respective fund manager under section 246; (c) reduce the number of members of the management committee under section 24 7 and the frequency of meetings ; and (d) reduce the frequency of meetings of the host communities advisory committee under section 249. Incorporation 235.--{ 1) The sett!or shall incorporate host communities development of host trust (in this Act referred to as "the trusf') for the benefit of the host communities communities for which the sett!or is responsible. development trusts. (2) Where there is a collectivity of settlors operating Lmder a joint operating agreement with respect to upstream petroleum operations, the operator appointed under the agreement shall be responsible for compliance with this Chapter on behalf of the settlors. (3) For sett[ors operating in shallow water and deep offshore, the littoral communities and any other community determined by the sett!ors shall be host communities for the purposes of this Act Act No 3. (4) The sett \or sha 11 for the purpose of setting up the trust, in consu !tation 2020. with the host communities, appoint and authorise a board of trustees ("the Board of Trustees"), which shall apply to be registered by the Corporate Affairs Commission as a corporate body under the Compai1ies and Allied Matters Act in the manner provided under this Chapter. (5) The name of the corporate body to be registered by the Board of Trustees shall contain the phrase "host communities' development trust". (6) The Commission or Authority, as the case may be, shal!- (a) make regulations on the administration, guide and safeguard the utilisation of the trust fund; and (b) have the oversight responsibility for enstiring that the projects proposed by the Board of Trustees are implemented. Petroleum Industry Act, 2021 2021 No. 6 A277 (7) The settlor shal I undertake needs assessment that w il I metamorphose into the community development plan for the purpose ofde term in ing the projects to be undertaken by the host communities development trust.

236. The host communities development trust shall be incurporated- Timcframe for (a) within 12 months from the effective date for existing oil mining leases; incorporation (b) \vithin 12 months from the effective date·for existing designated of host communities facilities; de,·elopment ( c) within 12 months from the effective date for new designated fac iIities trust. under construction on the effective date ; (d) prior to the application for field development plan for existing oil prospecting licences; (e) prior to the application for any field development p!an under a petroleum prospecting licence or petroleum mining lease granted under this Act; and (f) prior to commencement of commercial operations for licensees of designated facilities granted under this Act. 237.---{ I) Subject to the provisions of this Act, where the whole or pa1t Transfer of of an interest in a licence or lease governed by this Act is assigned, novated or settlor"s interest and otherwise transferred to another party, the legal and equitable interest, rights obligations and obligations of the transferor in relation to any associated host communities subject to development plan and host communities development trust, shall be deemed host to attach to the property to be transferred to the transferee, the legal and communities equitable interests, rights and obligations of the transferor shall be deemed to de\·clopment trust become the interests, rights and obligations of the transferee. obligation, (2) Where the whole or pai1 of a licence or lease governed by this Act is surrendered under this Act, the holder or holder nominee will continue to discharge its surviving obligations, notwithstanding that the area that is surrendered may be granted to a new lessee or licensee and where the surviving obligations have been complied with the holder shal! have no further obligations relating to the pa1t that was surrendered or the whole of the licence or lease where the entire licence or lease was surrendered. (3) Where any licence or lease governed by this Act is revoked, terminated or expired, the holder will continue to discharge its surviving o b Iigations, notwithstanding that the area revoked, terminated or expired may be granted to a new lessee or licensee and where the surviving obligations have been complied with, the holder shall have no further obligations. A 278 2021 No. 6 Petroleum lndush}' Act, 2021 Failure to 238. Unless as otherwise provided for in this Act, failure by any holder incorporate of al ice nee or lease governed by this Act to comply with its obligations under host this Chapter, after having been informed of such failure in writing by the· curn1mmiiies di;:,·e\opment Commission or Authority as the case may be, may be grounds for revocation trust. of the applicable licence or lease. Objecthes 239.--{l) The constitution of the host communities development trust of host sh a11 al low the host co 111 mu ni ties deve Iop men t t ms t to manage and supervise communities the adrninistratirni. of the annual contribution of the settlor contemplated under dcydopment this Chapter and any other sou re es of funding. trust. (2) The objectives of the host communities development trust shall be specified in the constitution as set out in subsection (3) {a) to (e). (3) The objectives of the host communities development trust shall include, to - (a) finance and execute projects for the benefit and sustainable development of the host communities; (b) undertake infrastructural development of the host communities ,vithin the scope of funds available to the Board of Trustees for such purposes; ( c) fac iIi tate economic em powc rmen t op portu n ities in the host communities; {d) advance and propagate educational development for the benefit of members of the host communities; (e) support healthcare development for the host communities; (f) supp011 local initiatives within the host communities, \Vhich seek to enhance protection of the environment; (g) support local initiatives within the host communities which seek to enhance security; (h) invest part of available fund for and on behalf of the host communities; and (i) assist in any other developmental purpose deemed beneficial to the host communities as may be determined by the Board of Trustees. ( 4) Notwithstanding the provisions of this Act relating to funding of the trust fund, nothing shall preclude the host communities from their entitlements under any other law. Petroleum Industry Act, 2021 2021 No. 6 A 279 240.--{ 1) The constitution of each host communities development trust Sources of shall establish a fund comprising of one or more accounts ("host communities funding for development trust fund") to be funded under this section. petroleum host (2) Each senior, where applicable through the operator, shal! make an communities annual contribution to the applicable host communities development trust fund development trust. of an amount equal to 3% of its actual annual operating exp end iture of the preceding financial year in the upstream petroleum operations affecting the host communities for which the applicable host communities development trust fund was established. (3) Each host communities development trust may receive donations, gifts, grants or honoraria that are provided to such host communities development tnist for the attainment of its objectives. (4) Profits and interest accruing to the reserve fund of host communities development trust shall also be contributed to the applicable host communities development trust fond.

241. The constitution of each host communities deve \opment trust sha 11 Matters on provide that the applicable host communities development trust fund be used which the exclusively for the implementation of the applicable host communities funds may be utilised. development p Ian. 24 2.--{ 1) The constitution of the host communities development trust The Board shall contain provisions requiring the Board of Trustees to be set up by the of Trustees. composition settlor, who shall determine its membership and the criteria for their appointment, and provided that the membership of the Board of Trustees of the host commimities management. development trust shall be subject to the approval of the Commission or Authority, as the case may be. (2) The senior shal I, i11 consultation with the host communities determine the membership of the Board of Trustees to include persons of high integrity and professional standing, who shall come from the host communities and the Members of the Board of Trustees shall elect a Chairman from amongst themsel\'.es. (3) The sett!or shall determine- (a) the selection process, procedure for meeting, financial regulations and administrative procedures. of the Board of Trustees; ( b) the remuneration, discipline, qua\ ification, disqualification, suspension and removal of members of the Board of Trustees; and (c) other matters other than the above relating to the operation and activities of the Board of Trustees. A 280 2021 No. 6 Pelro!eum Industry Act, 2021 ( 4) Each member of the Board of Trustees shall serve a term of four years in the first instance and may be reappointed for another term of four years and no more. (5) Board of Trustees shall have a secretary, who shall be appointed by the settlor to keep the books of the Board. Duties and 243. The Board of Trustees shall be responsible for the general functions of management of the host communities development trust and shall be the Board of responsible for- Trustees. (a) determining the criteria, process and proportion of the host communities development trust fund to be allotted to specific development programs; ( b) approving the projects for which the host communities development trust fund shall be utilised ; (c) providing general oversight of the projects for which the host communities development trust fund shall be utilised ; (d) approving the appointment of fund managers for purposes of managing the reserve fund ; (e) set up the management committee of the host communities development trust and appoint its members; and (f) determining the al location of funds to host cormnunities based on the matrix provided by the settlor. Allocation 244. The Board of Trustees shall in each year and under section 240 of of funds. this Act allocate from the host communities development tmst fund, a sum equivalent to-- (a) 75% to the capital fund out of which the Board of Trustees shall make disbursements for projects in each of the host communities as may be determined by the management committee in furtherance of the objectives set out in section 234 of this Act, provided that any sums not qtilised in a given financial year shall be rolled over and utilised in subsequent year; (b) 20% to the reserve fund, which sums shal I be invested for the uti !isation of the host communities development trust whenever there is a cessation in the contribution payable by the settlor; and (c) an amount not exceeding 5% to be utilised solely for administrative cost of running the trust and special projects, which shall be entrusted by the Board of Trustee to the s.ett!or, provided that at the end of each financial year, the settlor shall render a full account of the utilisation of the fund to the Board of Trustees and where any portion of the fund is not utilised in a given year, it shall be returned to the capital fund. Petroleum Industry Act, 202 l 2021 No. 6 A281 245.---{ I) The settlor shall provide to the Board of Trustees a matrix for Matrix for distribution of the trust fund to the host communities. distribution of trust (2) The Board of Trustees shal1 utilise the matrix provided under fund. subsection ( l) for distribution of the funds in the host communities development trust fund to each of its host communities. 246.-----( 1) The Board of Trustees s-hal I engage a fund manager to invest Engagement the reserve fund as the fund accrues. of fund managers. (2) The Board ofTrustees shall manage the interest and profits accruable from the investment of the reserve fund and allocate the gain in accordance with section 244 of this Act. 247.----(1) The constitution of the host communities development trust Management shall contain provisions requiring the Board of Trustees to set up a management committee, committee for the host communities development trust. composition and powers. (2) The membership of the management committee shall comprise- (a) one representative of each host community, who shall be nominated by the host community as a non-executive member; and (b) executive members, selected by the Board of Trustees shall be Nigerians of high integrity and professional standing, and may not necessarily be members of the host communities. (3) A person appointed under subsection (2) (a) and (b) shall serve a term of four years in the first instance and may be reappointed for another term of fouryears and no more. (4) The Board ofTrustees shall in accordance with the host communities development trust detennine-- (a) the selection process, procedure for meetings, financial regulations and administrative procedures of the management committee; (b) the remuneration, discipline, qualification, disqualification, suspension and removal of members of the management committee ; and (c) any other matter relating to the operations and activities of the management committee. (5) The management committee shall have a secretary, who shall be appointed by the Board of Trustees to keep the books of the committee.

248. The management committee shal! be responsible for the general Duties and administration of the host communities development trust on an ad hoe basis functions of the and be responsible for the- management (a) preparation of the budget of the host communities development trust committee. and submit it to the Board of Trustees for approval ; A 282 2021 No. 6 Petroleum Industry Act, 2021 (b) development and management of the contracting process for project award on behalf of the host communities development trust subject to approval of the Board of Trustees; (c) determination of project award winners and contractors to execute projects on behalf of the host communities development trust through a transparent process subject to approval of the Board of Trustees; (d) supervision of projects execution; (e) nomination of fund managers for appointment by the Board of Trustees for approval, to manage the reserve fund ; (f) reporting on the activities of the management committee, contractors and other service providers to the Board of Trustees ; and (g) undertaking of any other function and duty that may be assigned to it by the Board of Trustees to enhance the performance of the host communities development trust. Host 249.--{l) The constitution of the host communities development trust communities shall contain provisions mandating the management committee to set up an advisory advisory committee ("host communities advisory committee"), which shall committee and contain at least one member of each host cam m unity. composition. (2) The manage1nent committee sha!I in accordance with the constitution of the host communities development trust, determine- (a) the selection process, procedure for meetings, financial regulations and administrative procedures of the host communities advisory committee; (b) the remuneration, discipline, qualification, disqualification, suspension and removal of members of the host communities advisory committee; and (c) any other matter relating to the operations and activities of host communities advisory committee. (3) Decisions of the management committee with respect to subsection (2) shall be subject to the approval of the Board of Trustees. Duties and 250. The host communities advisory committee shall perform the functions of following functions- the host communities (a) nominate member to repres~nt the host communities on the advisory management committee; committee. (b) articulate com,mmity development projects to be transmitted to the management committee; (c) monitor and report progress of projects being executed in the community to the management committee; and Pelroleum Induslry Ac!, 2021 2021 No. 6 A2S3 (d) advise the management committee on activities that may lead to improvement of security of infrastructure and enhancement of peace-building within the communities and the entire area of operation.

251.-(1) The settler shall after the grant of any licence or lease Host issued under this Act, conduct a needs assessment ("host communities communities needs assessment") in accordance with this Act and regulations made needs assessment. under this Act. (2) Each host communities needs assessment shall, from a social, environmental, and economic perspective- (a) determine the specific needs of each affected host communities; (b) ascertain the effect that tbe proposed petroleum operations might have on the host communities; and (c) provide a strategy for addressing the needs and effects identified. (3) Each host communities needs assessment sha!l show that the settler has- (a) engaged with each affected host communities to understand the issues and needs of such host communities; (b) consulted with and considered the reasonable concerns of women, youth and community leaders ; and (c) engaged with each affected host communities in developing a strategy to address the needs and effects identified in the applicable host communities needs assessment. (4) The settler shall develop a host communities development plan and shall submit to the Commission or Authority, as the case may be, based on the findings of the host communities needs assessment, in order to undertake its oversight function preparatory to the establishment of the trust.

252. The host communities development plan shall be based on the matrix Host provided for in section 245 and such single plan shal!- communities development (a) specify the community development initiatives required to respond plan. to the findings and strategy identified in the host communities needs assessment ; (b) determine and specify the projects to implement the specified initiatives ; (c) provide a detailed timeline for projects; (d) determine and prepare the budget of the host communities development plan; A 284 2021 No. 6 Petroleum h1dushy Act, 2021 (e) set out the reasons and objectives of each project as supported by the host communities needs assessment; Act No 2. (f) conform with the Nigerian content requirements provided in the

2010. Nigerian Oil and Gas Industry Content Development Act; and (g) provide for ongoing review and reporting to the Commission. Financial 253. The financial year of the host communities development trust shall year of the commence on l st January and end on 31 st December of each year or any host other date set for this purpose by the Board of Trustees. communities development trust. Accounts 254. The constitution of the host communities development trust shall and audit contain provisions requiring the Board of Trustees to- (a) keep account of the financial activities of the host communities development trust; and (b) appoint auditors to audit the accounts of the host communities development trust annually. Mid-year 255. The constitution of the host communities development trust shall and annual contain provisions requiring the- reports. (a) management committee to submit a mid-year report ofits activities to the Board of Trustees not later than 31 st August of the particular year; (b) management committee to submit an annual report accompanied by its audited account to the Board of Trustees not later than 28th February of the succeeding year; (c) Board of Trustees to submit an annual repo11 of the activities of the host communities development trust accompanied by its audited account to the settler not later than 3 I st March of the particular year ; and (d) settler to submit an annual report of the activ.ities of the host communities development tnist accompanied by its audited account to the Commission or Authority, as the case may be, not later than 3 l st May of the particular year. Exemption 256. The funds of the host communities development trust created under from income this Act shall be exempted from taxation. tax. Deduction 257.-(l) Any payment made by the settlor under section 240 (2) of of payment this Act, shall be deductible for the purposes of hydrocarbon tax and companies for petroleum income tax as applicable. host communities development. Petroleum Industry Act, 2021 2021 No. 6 A285 (2) Where in any year, an act of vandalism, sabotage or other civil unrest occurs that causes damage to petroleum and designated facilities or disrupts production activities within the host communities, the community shall forfeit its entitlement to the extent of the costs of repairs of the damage that resulted from the activity with respect to the provisions of this Act within that financial year: Provided the interrnption is not caused by technical or natural cause. (3) The basis for computation of the trust fund in any year shall always exclude the cost of repairs of damaged facilities attributable to any act of vandal ism, sabotage or other c iv ii unrest. CHAPTER 4 -PETROLEUM INDUSTRY FISCAL FRAMEWORK pART !-OBJECTIVES ANO ADMINISTRATION 258.--{ I) The objectives of this Chapter are to- Objectives. (a) establish a progressive fiscal framework that encourages investment in the Nigerian petroleum industry, balancing rewards with risk and enhancing revenues to the Federal Government of Nigeria; (b) provide a forward-looking fiscal framework that is based on core principles of clarity, dynamism and fiscal rules of general application ; ( c) estab !ish a fiscal framework that expands the revenue base of the Federal Government, while ensuring a fair return for investors; (d) simplify the administration of petroleum tax; and (e) promote equity and transparency in the petroleum industry fiscal regime. (2) All money collected from the petroleum industry that are due to the Government shall be transferred to the Federation Account in a timely manner, subject to this Act and these payments shall include taxes, royalties, production shares, profit shares, signature bonuses, production bonuses, renewal bonuses, rents, fees, fines, and other levies due in relation to the grant, assignment, termination, and breach of licences, leases and permits.

259. From the commencement of this Act, the administration and Administration. collection of Government revenue in the petroleum industry shall be the function of the Federal Inland Revenue Service (the Service) and the Commission, and- (a) the Service shall be responsible for the assessment and collection of- · (i) hydrocarbon tax and enforcement of the provisions ofthis Act as it relates to hydrocarbon tax assessment and revenue collection, and A 286 2021 No. 6 Petroleum Indust1y Act, 2021 (ii) companies income tax and tertiary education tax in accordance with this Act as it relates to taxable petroleum operations; (b) the Commission shall be responsible for the determination and collection of- (i) royalties, signature bonus, rents, and related payments and its enforcement under this Act, and (ii) related payments or production shares, where the model contract includes provisions related to production sharing, profit sharing or risk service provisions; and ~ (c) the Authority shal ! be respons ib!e for the determination and collection of the gas flare penalty arising from midstream operations and its enforcement under this Act. PART II-HYDROCARBW TAX Application 260.-{ 1) This part applies to companies engaged in upstream petroleum of this operations in the onshore, shallow water and deep offshore, provided that- Part. (a) hydrocarbon tax shall apply to crude oil as well as field condensates and liquid natural gas liquids derived from associated gas and produced in the field upstream of the measurement points; and (b) hydrocarbon tax under this Part shall not apply to------ (i) associated natural gas, including gaseous natural gas liquids produced in the field and contained in the rich gas, and non-associated natural gas, (ii) condensates and natural gas liquids produced from non-associated gas in fields or gas processing plants, provided the related volumes are determined at the measurement points or at the exit of the gas processing plant, regardless of whether the condensates or natural gas Iiquids are subsequently commingled with crude o i!, and (iii) any condensates and natural gas liquids produced from associated gas at gas processing or other facilities downstream of the measurement points. (2) The costs of production of associated gas, upstream of the measurement point shall be a!located to crude oil for the purposes of calculating hydrocarbon tax, provided that capita! and operating costs for wells solely Cap. c 21 , producing associated gas-cap gas shall not be allocated to crude oil, but shall LFN. 200.J.. be claimed under the Companies Income Tax Act. (3) This Part shall not apply to a frontier acreage until it is reclassified under section 68 (3) of this Act and to deep offshore. Petroleum lndushy Act, 2021 2021 No. 6 A 287 (4) For the purpose of determining royalties, condensates shall be treated as crude oil and natural gas liquids as natural gas. (5) Upstream petroleum operations shall also be subject to Companies Cap. C2L Income Tax Act. LFN. 2004.

261. There shall be levied upon the profits of any company engaged in Charge of upstream petroleum operations in relation to crude oil a tax to be known as hydrocarbon hydrocarbon tax, which shall be charged and assessed upon its profits related tox. to the operations and payable during each accounting period in accordance with this Act. 262.~( I) Subject to this Act, in relation to any accounting period, the Ascertainment crude oil revenue of a company for that period shall be the value of any of crude oil re\'enue. chargeable oil adjusted to the measurement points, based on the~ adjusted (a) proceeds of all chargeable oil sold by the company; and profit. assessable (b) value of a!! chargeable oil disposed by the company. profits and (2) For the purpose of subsection (I), the value of any chargeable oil chargeable profits. disposed of, shal I be regarded as the aggregate of the va Iue of that crude oil determined for royalties for all fields in accordance with this Act or any applicable law. (3) Subject to section 266 (2) of this Act, the adjusted profits of an accounting period shal I be the profits of that period after the deductions allowed by section 263 (I) of this Act. (4) The assessable profit of an accounting period shal I be the adjusted profit of that period after any deduction allowed by section 265 of this Act. (5) The chargeable profits of an accounting period shall be the assessable profits of that period after the deduction allowed by section 266 of this Act.

263.-(1) In computing the adjusted profit of a company in upstream AllO\mble petroleum operations related to crude oil for any accounting period, there shall deductions. be deducted expenses wholly, reasonably, exclusively and necessarily incurred during that period for the following, i.nc!uding but without otherwise expanding or limiting the generality of- (a) rents incurred by the company for the period pursuant to a petroleum mining lease or petroleum prospecting licence; (b) all royalties the liability for which was incurred and were paid by the company during that period in respect of crude oil and associated gas and where a petroleum mining lease includes payments to the Federation Account A 288 2021 No. 6 Petroleum Industry Act, 2021 related to production sharing, profit sharing, risk service contracts or other contractual features under a model contract and the company has incurred liability for such payments in kind or in cash; (c) expenses directly incurred for repair of plant, machinery or fixtures employed for the purpose of carrying on production activities or for the renewal, repair or alteration of production implement, ute11::; iIs or article::. so employed; (d) an expenditure, tangible or intangible directly incurred in connection with the drilling of the first exploration well and the first two appraisal wells in the same field, whether the wells are productive or not, provided that subsequent exp !oration we Ils, appraisal we I ls and other wells shal I be treated Fifth as qualifying drilling expenditure under the Fifth Schedule to this Act and Schedule. where a deduction may be given under this section in respect of any such expenditure, that expenditure shall not be treated as qua!ifyitig drilling expenditure for the purpose of the Fifth Schedule to this Act; (e) any amount contributed to a fund, scheme or arrangement approved by the Commission for the purpose of decommissioning and abandonment, provided that the surp \us or residue of the fund shall be subject to tax under this Act at the end of life of the field, where such surplus is returned to the lessee ; (f) all sums the liability of which was incurred by the company to the Federal Government or any State or Local Government Council by way of levies, stamp duties and fees ; (g) costs of gas reinj ection wells, which are re-injecting natural gas that otherwise would be flared, subject to ratification by the Commission; and (h) any amount contributed to any fund, scheme or arrangement approved by the Commission pursuant to the establishment of host communities development trusts under Chapter 3 of this Act, Environmental Remed iation Fund, Niger Del ta Deve !opment Commission and other similar contributions. (2) Where a deduction has been a! Iowed to a company under this section in respect of a liability of the company and the liability or part of the liability is waived, released or recovered, the amount of the deduction corresponding to the liability or part thereof shall, for the purpose of section 262 (I) of this Act, be treated as income of the company of its accounting period, in which such waiver or release was made or given. Deductions 264. Subject to tl1is Act, for the purpose of ascertaining the not allmYed. adjusted profit of a company in the accounting period from 1ts upstream petroleum operations applicable to crude oil, no deduction shall be allowed in respect of- Petroleum Industry Act, 2021 2021 No. 6 A289 (a) disbursements or expenses not being money wholly, reasonably, exclusively and necessarily incurred for the purpose of those operations; (b) expenditure for the purchase of information relating to the existence and extent ofpetroleum deposits, other than for the acquisition of geophysical, geological and geochemical data and information ; (c) expenditure incurred as a penalty, natural gas flare fees or imposition relating to natural gas flare; ( d) financial or bank charges, arbitration and Ii tigat ion costs, bad debts and interest on borrowing ; (e) head office or affiliate costs, shared costs, research and development costs or any other like shared indirect production costs ; (f) production bonuses, signature bonuses paid for the acquisition of, or ofrights in or over, petroleum deposits, bonuses or fees paid for renewing petroleum mining lease or petroleum prospecting licence or marginal field or fees paid for assigning rights to another party; (g) tax inputted into a contract or an agreement on a net tax basis anrJ paid by a company on behalf of the vendor or contractor ; (h) capital withdrawn or sum employed or intended to be employed as capital; (i) capital employed in improvements as distinct from repairs ; (i) sum recoverable under an insurance or contract of indemnity, except an amount that is not recovered under the scheme ; (k) rent of or cost of repairs to any premises or part of premises not incurred for the purpose of those operations ; ([} amounts incurred in respect of tertiary education tax, companies income tax, any -income tax, profits tax or other similar taxes, whether charged within Nigeria or elsewhere; (m) the depreciation of any premises, buildings, structures, works of a permanent nature, plant, machinery or fixtures; (n) payment to provident, savings, widows and orphans or other society, scheme or fund ; (o) any contribution to a pension, provident or other society, scheme or fund for production staff which may be approved, with or without retrospective effect, by the National Pension Commission subject to such general conditions or particular conditions in the case of the society, scheme or fund as the Service may prescribe, provided that any sum received by or the value of any benefit obtained by the company, from any approved pension, A 290 2021 No. 6 Petroleum Indusfl:v Act, 202 l provident or other society, scheme or fund, in the accounting period of that company shall, for the purpose of section 262 ( I) oft!iisAct, be treated as income of the company for that accounting period ; (p) all customs duties; and Sixth (q) costs under paragraph 2 (2) (c) of the Sixth Schedule Lo this Act. Schednle. Assessable 265.-(1) The assessable profits for each company or petroleum mining profits and lease for any accounting period shall be the amount of the adjusted profit of losses. that period after the deduction of the amount of any loss incurred by that company during any previous accountii1g period. (2) The assessable profit shall be determined separately for each of the two classes of chargeable tax identified in section 267 (a) and (b). (3) A deduction under subsection ( l) shall be made so far as possible from the amount, if any, of the adjusted profit of the first accounting period after that in which the loss was i11curred, and, so for as it cannot be so made, then from the amount of the adjusted profit of the next succeeding accounting period and so on until such loss is fully deducted. (4) Within five months after the end of any accounting period of a cam pany, or within su eh further time as the Service may permit in writing, the company may elect in writing that a deduction or any part to be made under this section shall be deferred to and be made in the succeeding accounting period, and may so elect in any succeeding accounting period. Chargeable 266.--( 1) The chargeable profits of any company for any accounting profits and period shall be the amount of the assessable profits of that period after the allmrances. deduction of any amount to be allowed in accordance with the provisions of this section, namely- Fifth (a) the aggregate amount of capital al!mvances due to the company Scheduk. under the provisions of the Fifth Schedule to this Act for the accounting period; Sixth ( b) the aggregate amount of al I production allowances due to the company Schedule. under the provisions of the Sixth Schedule to this Act for the accounting period; and (c) in the case of acquisition costs of petroleum rights, the value of the rights and the value of the assets acquired shall be reported separately to the Service, provided that the value of the rights sha!l be eligible for annual allowance of20% per annum and the value of the assets shall be depreciated based on the appl icab !e depreciation rates for the respective assets, and there sha Il be a retention of I % in the last year unt iI the asset is disposed of. Petroleum Industry Act, 2021 2021 No. 6 A291 (2) In determining the chargeable profit, the total cost shall not exceed Sixth the cost~price ratio as determined in the Sixth Schedule to this Act. Schedule. (3) The chargeable profits and allowances shall be determined separately for the two classes of assessable profits under section 267 (a) and (b) of this Act. PART III-AscERTAJNMENT OF CHARGEABLE TAX

267. The chargeable tax for any accounting period of a company Chargeable shall be a percentage of the chargeable profit fort hat period aggregated ta,;. and it shall be- (a) 30% of the profit from crude oil for petroleum mining lenses selected under section 93 (6) (b) and (7) (b) of this Act with respect to onshore and shal!ow water areas; and (b) 15% of profit from crude oil for onshore and shallow water and for petroleum prospecting licences selected under section 93 (6) (a) and (7) (a) of this Act.

268.-( 1) Where, for any accounting period of a company, the amount Additional of the chargeable tax for that period, calculated in accordance with the chargeable ta'\: payable provisions of this Act other than this section, is less than the amount mentioned in certain in subsection (2), the company is liable to pay an additional amount ofchargeable circumstances. tax for that period equal to the difference benveen those two amounts. (2) The amount referred to in subsection ( l) is, for any accounting period of a company, the amount which the chargeable tax for crnde oil for that period, calculated in accordance with this Act, would come to, in the case of cn1de oil exported from Nigeria by the company, the reference in section 262 (l) (a) of this Act to the proceeds of sale were a reference to the amount obtained by multiplying the number of barrels of that crnde oil determined at the measurement point by the fiscal oil price per barrel. (3) For the purpose of subsection (2), the Commission shall establish the fiscal oil price at each measurement point on an expo1t parity basis under paragraph 8 (I) and (2) of the Seventh Schedule and the total value of the Se\·enth chargeable oil for a company shall be the sum of the multiplications of volume Schedule. and fiscal oil price at all measurement points as estab Iished by the Commission. (4) The whole of any additional chargeable tax for crude oil and associated gas payable by a company by virtue of this section for any accounting period shal I be payable concurrently with the final instalment of the chargeable tax payable for that period. A 292 2021 No. 6 Petroleum l11dust1:v Act, 2021 ( 5) Where there is no fi seal o i1price established for a crude oil stream, the Commission shaB establish fiscal oil price for such stream and every fiscal oil price per barrel established shall bear a fair and reasonable relationship-- (a) to the established fiscal oil price of Nigerian crude oil streams of comparable quality and specific g1·avity; or (b) where there are no such Nigerian crude oil streams of comparable quality and specific gravity it shall bear a fair and reasonable relationship to the official selling prices at main international trading centers for crude oil of comparable quality and gravity, due regard being had in either case to freight differentials and other relevant factors. (6) Where any crude oil, which in relation to a particular company is its chargeable oil, is exported from Nigeria by another company, that crude oil shall for the purpose of this section be deemed to be exported from Nigeria by that particular company. PART I v-AsCERTAJN:,.,1ENT OF CHARGEABLE PROFITS AND CoNsouDATION FORTA.X PURPOSES Artificial 269.-( I) Where the Service is of the opinion that any disposition is not m:msactions. given effect to or that a11y transaction which reduces or would reduce the amount of any tax payable is artificial or fictitious, the Service may disregard any such disposition or direct that such adjustments sha! I be made with respect to the companies" liability to tax as the Service considers appropdate to counteract the reduction of liability to tax effected or reduction which would otherwise be t:ffected, by the transaction and the companies concerned shall be assessed accordingly. (2) In subsection ( 1). the express ion "disposition" includes any trust, grant, covenant, agreement or arrangement. (3) For the purpose of this section, the following transactions shall be deemed to be artificial or fictitious, namely, transactions between persons one of whom has control over the other or between persons both of whom are controlled by some other person which, in the opinion of the Service, were not made on tem1s which might be expected to have been made by independent persons engaged in the same or similar activities dealing with one another at arm's length. (4) A company in respect of which any direction is made under this section, shall have a right of appeal in like manner as though for the purpose of Part TII of this Chapter such direction was an assessment. (5) Subject to this Act, the provisions of tbe Income Tax (Transfer Pricing) Regulations 2018 shail apply. Petrolellm Indust,y Act, 2021 2021 No. 6 A 293

270. Where a company has not yet commenced the production and Pre- sale or disposal of chargeable oil, al! costs incurred wholly, reasonably, production exclusively and necessarily for the purpose ofcoming into upstream petroleum cost. operations, subject to sections 263 and 264 of this Act, shall upon commencement of production and sale or disposal ofchargeab!e oil be deemed to bave incurred a qualifying pre-production capita! expt::nditure which shall Fifth be amortised in Ii ne with paragraphs 5 and l 7 of the Fifth Schedule to this Act Schedule.

271.-( l) Without prejudice to section 275 ofthisAct, where a trade or Trade or business of upstream petroleum operations carried on in Nigeria by a company business is sold or transferred to another company for the purposes of better organisation sold or transferred. of that trade or busir1ess or the transfer of its management and any asset employed in that trade or business is sold or transferred, then, if the Service is satisfied that one of those companies has control over the other or that both companies are controlled by some other person or are members of a recognised group of companies and have been so for a consecutive period of at least three years prior to the date of reorganisation, the provisions set out in subsection (2) shall have effect. (2) Where subsection ( l) app! ies, the Service may in its discretion if, on or before the date on which the trade or business is so so Id or transferred, the first sale of or bulk disposal of chargeable oil by or on behalf of the company sel 1ing or transferring the trade or business has occurred, but the first sale of or bulk disposal of chargeable oil by or behalf of the company acquiring that trade or business has not occurred, direct that~ (a) the first accounting period of the company acquiring that trade or business shall commence on the date on which the sale or transfer of the trade or business takes place and end on 31st December of that same year, and the definition of accounting period in sect ion 3 18 of this Act sha 11 be construed accordingly ; (b) for the purpose of the Fifth Schedule to this Act, tlie asset sold or Fif1h transferred to the company acquiring that trade or business by the company Schedule. se!ling or transferring the trade or business shall be deemed to have been sold for an amount equal to the residue of the qualifying expenditure on the asset on the day following the day on ..vhich the sale or transfer occurred; and (c) the company acquiring the asset so sold or transferred shall be Fifth deemed to have received all allowances given to the company selling or Schedule. transferring the trade or business in respect of the asset under the Fifth Schedule to this Act and any al! owances deemed to have been received by that company under the provisions of the Fifth Schedule, provided that the Service in its discretion may~ A 294 2021 No. 6 Petroleum Indushy Act, 2021 (i) require the company selling or transferring the trade or business or the company acquiring that trade or business, to guarantee or give security to the satisfaction of the Service for payment in fu t1 of tax due or to become due from the company selling or transferring the trade or business, and (ii) impose such conditions as it deems fit on either of the companies or on both of them. (3) In the event of failure by the company or companies selling to fulfil the guarantee or conditions, the Service may revoke the direction and may make the additional assessments or repayment of tax as may be necessary to give effect to the revocation. (4) Where the acquiring company makes a subsequent disposal of the assets thereby acquired within the succeeding three years after the date of acquisition, any concession enjoyed under this subsection shall be rescinded and the corn pany shal I be treated as if it did not qua! ify for the concession as at the date of the initial reorganisation. (5) Where a trade or business of petroleum operations carried on in Nigeria by a comp?.iy incorporated under any law in force in Nigeria is sold or transferred to anc J,er company and any asset employed in that trade or business is so sold or tr--.r,sferred, and the Service is satisfied that the companies are not connectecl r.nd that none has contra 1over the other or both are not contra Iled by another r f mpany, the- (a) tr '.1 saction shal I be dealt with under section 266 ( l) (c) ; and (b) al :,..)unting period of the new trade or business sha!l be as provided for in su:; ,ection (2). (6) Jc r ~he purpose of subsection (2) (a), the accounting period of the company , quiring that ttade or business shall commence on the date on which the- , ale or transfer of the trade or business to the company takes place or on su,J. date within the calendar month in which the sale or transfer takes place a·,, nay be elected by the company with the approval of the Service and end on 3 I st December of that same year and the definition of "Accounting Period" under this Act shall be construed accordingly. (7) A merger, take.over, transfer or restructuring of the trade or business carried on by a company shall not take place without the approval and having obtained direction of the Service on any tax that may be due and payable. (8) Reference to a 'trade or business' in this section sha! I inc Jude references to any part of the trade or business. Pelrolewn Jndus/ry Act, 2021 2021 No. 6 A295

272.-(l)A company engaged in upstream petroleum operations across Consolidation terrains shall be allowed to consolidate costs for the purpose of companies of costs and ta'\es. income tax. (2) A company engaged in upstream petroleum operations related to '· crude oil across terrains shall be allowed to consolidate costs and taxes for the purposes of hydrocarbon tax only across assets in which it holds licences and leases in accordance with the two categories of chargeable tax stipulated in section 267 of this Act. (3) In respect of a company in existence prior to the commencement of this Act, the amount of any loss incurred during any accounting period by a company selling or transferring its trade or business whether to a connected or unrelated party, being a loss which has not been allowed against any assessable profit of any accounting period of that company shal I not be al lowed against any assessable profit of the company acquiring that trade or business. (4) A company that is a contractor in a contract under section 85 of this Act shall be allowed to consolidate its losses and revenues across petroleum prospecting licences and petroleum mining leases granted after the commencement of this Act, for the purposes of subsections ( 1) and (2) with respect to the two tax classes under section 267 of this Act. PART V-PERSONS CHARGEABLE

273.-(l) Any person, other than a company, who engages in upstream Partnerships. petroleum operations either on his own account or jointly with any other person or in partnership with any other petson with a view to sharing the profits arising from the operations, commits an offence. (2) Where the person referred to in subsections (I) has benefitted from any profits on upstream petroleum operations, the person sha!l be subject to hydrocarbon tax and companies income tax under this Act on the profits and shall pay a penalty provided under section 297 of this Act. (3) Where t\vo or more companies are engaged in upstream petroleum operations either in partnership, in a joint venture or in concert under any scheme or arrangement, tax shall be charged and assessed on them in accordance with subsection ( 4). (4) The app011io11ment of any profits, outgoings, expenses, liabilities, deductions, qua! i:fying expenditure and the tax chargeable u pan each corn pany shall be in line with the equity interest of the parties under a jointly executed agreement that will be made available to the Service and where no jointly executed agreement is made available, the Commission shaU advise the Service the approved equity interest of the parties nncl it shall be binding on the parties. A 296 2021 No. 6 Petroleum Industry Act, 2021 Act No. 13, (5) Subject to this Act, where two or lnore companies are engaged in 2007. upstream petroleum operations either in partnership, in a joint venture or in concert under any scheme or arrangement, the Service may.make regulation, in compliance with section 61 of the Federal Inland Revenue Service (Establishment) Act, for the ascertainment of tax to be charged or assessed upon each company so engaged. (6) Regulations made under subsection (5) may make provisions- (a) with respect to apportionment of any profits, outgoings, expenses, liabilities, deductions, qualifying expenditure and tax chargeable upon each company; ( b) for the computation of any tax as if the partnership, joint venture, scheme or arrangement were carried on by one company and apportion that tax between the companies concerned ; (c) to accept other basis of ascertaining the tax chargeable upon each of the companies ; and (d) which have regard to any circumstances whereby the operations are partly carried on for any company by an operating company whose expenses are reimbursed by those companies. (7) Regulations made under this section may be of general application for the purpose of this section and this Part or for a class of arrangement or for a particular application to a specific partnership, joint venture, scheme or arrangement. ( 8) The effect of any regulation made under this section shall not impose a greater burden of tax upon any company so engaged in any partnership,joint venture, scheme or arrangement than would have been imposed upon that company under this Part, if all things enjoyed, done or suffered by such partnership,joint venture, scheme or arrangement had been enjoyed, done or suffered by that company in the proportion in which it enjoys, does or suffers those things under or by virtue of that partnership.joint venture, scheme or arrangement. Company 274.-(1) Where a company is being wound up or where in respect of ,,·ound up. a company a receiver has been appointed by any court, by the holders of any debentures issued by the company or otherwise, the company may be assessed and charged to tax in the name of the liquidator of the company, the receiver or any agent in Nigeria of the liquidator or receiver and may be so assessed and charged to tax for any accounting period whether before, during or after the date of the appointment of the liquidator or receiver with respect to companies income tax and hydrocarbon tax. Petroleum Industry Act, 2021 2021 No. 6 A297 (2) Any liquidator, receiver or agent under subsection (1) shall be answerable for doing the acts required to be done by virtue of this Act for the assessment and charge to tax of the company and for payment of such tax. (3) ,A. !iqu idator or receiver under subsection ( 1) shal I not distribute any asset of the Company to the shareholders ot debenture holders unless he has made provision for the payment in fuH of any tax which may be found payable by the company or by the liquidator, receiver or agent on be halfof the company.

275. Where a company which is or was engaged in petroleum operations A\'oidance transfers a substantial part of its assets to any person without having paid any by transfer. companies income tax or hydrocarbon tax, assessed or chargeable upon the company, for any accounting period ending prior to such transfer and in the opinion of the Service one reason for such transfer by the company was to avoid payment of such tax then that tax as charged upon the company may be sued for and recovered from that person in a manner similar to a suit for any other tax under section 294 of this Act.

276. Every person answerable under this Act for the payment of Indemnifica- companies income tax or hydrocarbon tax on beha! f of a corn pany may retain tion of representative. out of any money in or coming to his hands or within his control on behalfof such company so much as shall be sufficient to pay the tax and shall be indemnified against any person for payments made by him in accordance with this Act. PART Vl-A!>PUCABJLITY, AccoCNTS AND PARTICULARS 277,-{ l) Every company engaged in upstream petroleum operations Preparation related to crude oil shall for each accounting period of the company make up and delivery accounts of its profits or losses and prepare the following particulars for the of accounts and purpose of determining hydrocarbon tax- particulars. (a) a statement of accounts of its profits or losses ; (b) computations of its actual adjusted profit or loss and actual assessable profits of that period; (c) in connection with the Fifth Schedule to this Act, a schedule Fifth showing- Schedule. (I) the residues at the end of that period in respect of its assets, (ii) all qualifying petroleum expenditure incurred by it in that period, (~ii) the values of any of its assets disposed of in that period, and (iv) the allowances due to it under that schedule for that period; A 298 2021 No. 6 Petroleum Indushy Act, 2021 SL'\th (cl) in connection with the Si:x1h Schedule to this Act, a schedule showing Schedule. total production a!\owance from each and every field of its upstream petroleum operations related to crude oil; (e) a computation of its actual chargeable profits fort that period for the two classes of chargeable profits identified in section 267 (a) and (b) of this Act; (f) a statement of amounts repaid, refunded, waived or released to it, referred to in section 263 (2) of tn is Act, during that period ; (g) a computation of its chargeable tax for that period and where associated gas is being sold or otherwise delivered through the measurement point the methodology used to determine the chargeable tax; (h) duly completed self-assessment form attested to by the principal officer of the company ; and (I) evidence of payment of the final instalment. (2) Every company engaged in upstream petroleum operations related to crude oil shall, with respect to any accounting period of the company and within five months after the expiration of that period or within five months after the effective date of this Act, whichever is later, de Iiver to the Service a copy of its accounts, bearing an auditor's certificate, of that period, in accordance with subsection (1) and copies of the particulars referred to in subsection (I) relating to that period with the copy of the delivered company accounts and each copy of those particulars, shall, where the copies are----- (a) not estimates, contain a declaration signed by authorised officer of the company or by its liquidator, receiver or the agent of the liquidator or receiver, that the same is true and complete ; and (b) estimates, contain a declaration, similarly signed, that the estimate was made to the best of the ability of the person signh1g same. (3) Notwithstanding the provisions of this section, every company which is yet to commence bulk sa !es or disposal of chargeable oil, shall file with the Service its audited accounts and returns- (a) within 18 months from the date of its incorporation, in the case of a newly incorporated company; and (b) within five months after any period ending on 31 st December, in the case of any other company, provided that where there is an interval between 31st December of the preceding year and the date on which the company commences the bulk sale or disposal of chargeable oil, natural gas or condensate, the interval shall be deemed to form part of the preceding period. Petroleum Industry Act, 2021 2021 No. 6 A 299 ( 4) A company which fails to comply with subsection (2) or (3) is liable to pay as penalty for late filing- (a) Nl0,000,000 on the first day the failure occurs and N2,000,000 for each and every subsequent day in which the failure continues; or (b) other sum as may be prescribed by the Minister of Finance by order published in the Federal Government Gazette.

278. The Service may give notice in writing to any company engaged in Power of upstream petroleum operations related to crude oil as the Service may deem the Service necessary requiring the company to furnish further information, within to request further reasonable time as may be specified, in relation to any matter referred to in information. section 277 of this Act or any other matter which the Service may consider necessary for the purpose of this Act.

279.-(1) For the purpose of obtaining information in respect of any PolYer to company's upstream petroleum operations related to crude oil, the Service call for may give notice to a company requiring it within a period not less than 21 days returns and books. from the date of service of the notice, to complete and deliver to the Service any infonnation called for in such notice and in addition or alternatively requiring an authorised representative of such company or its !iqu idator, receiver or the agent of such liquidator or receiver, to attend before the Service or its authorised representative on the date or dates as may be specified in the notice and to produce for examination any books, documents, accounts and particulars which the Service may deem necessary. (2) Where a company assessable to hydrocarbon tax under the provisions of this Act fails or refuses to keep books or accounts which, in the opinion of the Service are adequate for the purpose of ascertaining the tax, the Service may by notice in writing require it to keep such records, books and accounts as the Service considers to be adequate in a form and in a language as the Service may direct and the company sha! 1keep the records, books and accounts as directed. (3)An appeal sha!l lie from any direction of the Service made under this section to the Tax Appeal Tribunal. 280 .--{ l) Nat later than two months after the commencement of each Returns of accounting period of any company engaged in upstream petroleum operations estimated related to crude oil, the company shall submit to the Service an estimated tax. return of its profits or losses for that accounting period for the purpose of hydrocarbon tax, which shall include- ( a) computations of its estimated adjusted profit or loss and of its estimated assessable profits of that period ; A 300 2021 No. 6 Petroleum Industry Act, 2021 Fifth (b) in connection with the Fifth Schedule to this Act, a schedule Schedule. showing- (i) the estimated residues at the end of that period in respect of its assets, (ii) all estimated qualifying petroleum expenditure incuned by it in that period, (iii) the values of any of its assets, estimated by references to the provisions of that schedule, to be disposed of in that period, and (h 1) the allowances due to it under that schedule for that period ; Sb.1h (c) in connection with the Sixth Schedule to this Act, a schedule showing Sc-hedule. estimated total production allowance from all its upstream petroleum operations related to crude oil on field by field basis; (d) a computation of its estimated chargeable profits of that period; and (e) a computation of its estimated tax for that period. (2) Where, at any time during the accounting period, there is a change in price, cost or volume, the company shall submit further returns on a monthly basis containing its revised estimated tax for st1ch period. (3) Where the further returns provided for under subsection (2) is not made, the Service shall impose interest at the prevailing LIBOR or any other successor rate plus 10% points for the differential of the revised tax over the estimated tax paid by the company. (4) Every return made by a company engaged in upstream petroleum operations related to crude oil in fu Ifi Iment of the provisions of this section shall be subject to review and validation by the Service. (5) Where a company does not provide the estimates under subsections (I) and (2), the Service shall have the right to determine such estimates on the best of judgment basis and impose same on the company. (6) A company which fails to comply with subsection (l) is liable to pay as penalty for late filing~ (a) N 10,000,000 on the first day the failure occurs and N2,000,000 for each and every subsequent day in which the failure continues ; or ( b) other sum as may be prescribed by the Minister of Finance by order published in the Federal Government Gazette. Petroleum Industly Act, 2021 2021 No. 6 A 301

281. Where it is shown by any company to the satisfaction of the Service Extension of that for some good reason, the company is not able to comply with section 277 periods for of this Act within the time limited by that section or any notice given to it under making returns. section 2 78 or 2 79 of this Act, within the time limited by any such notice, the Service may grant in writing such extension of thai time as the Service may consider necessary.

282.-(1) The Service shall proceed to assess a company with the Assessment hydrocarbon tax for any accounting period of the company imme di ate ly a fie r ofrnx payable. the expiration of the time allowed to such company for the delivery of self- assessment provided for in section 277 of this Act. (2) Where a company has delivered a self-assessment for any accounting period of the company, the Service may~ (a) accept the self-assessment; or (b) refuse to accept the self-assessment and proceed as provided in subsection (3) upon any failure as mentioned and the like consequences shall ensue. (3) Where, for any accounting period, a corn pany files a se If-assessment which was rejected by the Service or has failed to fi!e self-assessment as provided in section 277 of this Act within the time limited by that section or has failed to comply with any notice given to it under section 278 or 279 of this Act within the time specified in such notice or within any extended time provided in section 281 of this Act, and the Service is of the op in ion that the company is liable to pay hydrocarbon tax, the Service may estimate the amount of the ta.x to be paid by the company for that accounting period and make an assessment accordingly, provided that- ( a) the assessment shall not affect any liability otherwise incurred by such company by reason of its fai Iure or neglect to deliver the accounts and particulars or to comply with the notices; and (b) nothing in this subsection shall affect the_right of the Service to make any additional assessment under the provisions of section 283 of this Act.

283.-(1) Where the Service discovers or is of the opinion at any time Additional that, with respect to any company liable to hydrocarbon tax, tax bas not been assessments. charged and assessed upon the company or has been charged and assessed upon the company at an amount less than that which ought to have been assessed and charged for any accounting period of the company, the Service may within six years after the expiration of that accounting period- (a) assess the company, as often as may be necessary, with tax for that accounting period at such amount or additional amount as in the opinion of the Service ought to have been charged and assessed; and A 302 2021 No. 6 Petrolewn Indust,y Act, 2021 (b) may make any consequential revision of the tax charged or to be charged for any subsequent accounting period of the company. (2) Where a revision under subsection (I) results in a greater amount of tax to be charged than has been charged or would otherwise be charged, an additional assessment or an assessment for any such subsequent accounting period shall be made and the provisions of this Act as to notice of assessment, objection, appeal and other proceedings under this Act shall apply to any such assessment or additional assessment and to the tax charged. (3) For the purpose of computing under subsection (l) the amount or the additional .amount of tax for any accounting period of a company which ought to have been charged, all relevant facts consistent with section 289 (4) of this Act shall be taken into account even though it is not known when any previous assessment or additional assessment on lhe company for that accounting period was made or could have been made. (4) Notwithstanding the provisions of this section, where any form of fraud, willful default or neglect has been committed by or on behalf of any company in connection with hydrocarbon tax imposed under this Act, the Service may, at any time and as often as may be necessary, assess the company on such amount as may be necessary for the purpose of recovering any loss of tax attributable to fraud,willful default or neglect. i>.faking of 284.------(1) Assessments of hydrocarbon tax. shall be made in such fonn assessments. and in such manner as the Service shall authorise and shall contain the- (a) names and addresses of the companies assessed to tax or of the persons in whose names any companies have been assessed to tax, provided that the names of the represented companies are indicated; and ( b) particular accounting period and the amount of the chargeable profits and chargeable ta'{ for that period, in the case of each company for each of its accounting periods. (2) When any assessment is to be amended or revised, a form of amended or revised assessment shall be made in a manner similar to that in which the original of that assessment was made under subsection (1) showing the amended or revised amount of the chargeable profits and chargeable tax. (3) A copy of each assessment and of each amended or revised assessment shall be filed in a list \Vhich shall constitute the assessment list for the purpose of this Act. Petroleum Industry Act, 2021 2021 No. 6 A303 285.----( I) The Service shall cause to be served personally on or sent by Notices of courier to a company which is liable to hydrocarbon tax under this Act, by assessment. way of an additional assessment or an assessment by the Service, a notice of assessment stating the- (a) accounting period and the amount of its chargeabie profits and chargeable tax assessed and charged upon the company; (b) place at which payment of the tax should be made; and (c) rights of the company under sub~ection (2). (2) Where any person in whose name an assessment was made in accordance with this Act, disputes the assessment, the person may apply to the Service by notice of objection in writing, to review and revise the assessment made 611 him and the application sha!! be made within 30 days from the date of service of the notice of the assessment, stating the amount of chargeable- (a) profits of the company of the accounting period in respect of which the assessment is made ; and (b) tax and the tax which such person claims should be stated on the notice of assessment. (3) The Service, upon being satisfied that due to absence from Nigeria, sickness or other reasonable cause, the person in whose name the assessment was made was prevented from making the application within such period of 30 days, shall extend the period as may be reasonable in the circumstances. ( 4) After receipt of a notice of objection referred to in subsection (2), the Service may withh1 such time and p!ace as it shall specify, require- (a) the person giving the notice of objection to furnish such particulars as the Service may deem necessary ; and (b) any other person, by notice, to give evidence orally or in writing in respect of any matter necessary for the ascertainment of the hydrocarbon tax payable and the Service may further require that where such evidence isgiven- (i) orally, it shall be given on oath, and (ii) i11 writing, it shall be given by affidavit. (5) In the event of any person assessed who has objected to an assessment made upon him agreeing with the Service as to the amount of tax Iiab le to be assessed, the assessment shal ! be amended accordingly and notice of the tax payable shall be served upon the person. (6) Where an applicant for revision under subsection (2) fails to agree with the Service on the amount of the hydrocarbon tax, the Service shall give A 304 2021 No. 6 Petroleum Industry Act, 2021 such applicant notice of refusal to amend the assessment as desired by the applicant or may revise the assessment to such amount as the Service may determine and give the applicant notice of the revised assessment and tax payable, together with notice of refusal to any subsequent request to amend the revision and, where necessary, any reference in this Act to an assessment or additional assessment s11all be treated as a reference to an assessment or additional assessment as revised under the provisions of this subsection. Errors nnd 286.--( 1) An assessment, warrant or other proceeding purporting to be defects in made in accordance with this Act shall not be quashed or deemed to be void assessment or voidable for want of fonn or be affected by reason of a mistake, defect or and notice. omission, ifthe- (a) substance and effect of the assessment is in conformity with the provisions of this Act; and (b) company assessed or intended to be assessed or affected is designated according to common intent and understanding. (2) An assessment shall not be invalidated or affected by reason of- (a) a mistake as to the- (i) name of a company liable or of a person in whose name a company is assessed, or (ii) amount of the tax; or (b) any variance between the assessment and the notice, if in cases of assessment, the notice be duly served on the company intended to be assessed or on the person in whose name the assessment was to be made on a company, and such notice contains, in substance and effect, the particulars on which the assessment is made. Ta" 287. Notwithstanding anything to the contrary in any law~ computation. (a) all hydrocarbon tax computation made under this Act shall be in US Dollars ; and (b) any assessment made under section 284 of this Act shall be in US Dollars. p ART VII-APPEALS Appeals to 288. Any Company or tax payer, who does not agree with an assessment Tax Appeal made under section 285 (6) of this Act, may appeal against the assessment to Tribunal. the Tax Appeal Tribunal established under the provisions of section 59 of the Act No. 13. Federal Inland Revenue Service (Establishment) Act. 2007. Petroleum Jndusfly Act, 2021 2021 No. 6 A305

289. (l) Where--- Assessment to be final (a) no valid objection or appeal has been lodged within the time limited and by s~ction 2 85 of this A et or the rules of the re Ievant tribunal or court, as conclusive. the case may be, against an assessment as regards the amount of the hydrocarbon tax assessed, (b) the amount of the tax has been agreed to under section 285 (5) of this Act, or (c) the amount of the tax has been determined on objection or revision under section 285 (6) of this Act or on appeal, the assessment as made, agreed to, revised or determined on appeal, as the case may be, shall be final and conclusive for all purposes of this Act as regards the amount of such tax. (2) Where the fu 11 amount of the tax in respect of the final and conclusive assessment under subsection (I) is not paid within the appropriate period or periods prescribed in this Act, the provisions relating to the recovery of tax and to any penalty under section 29-2 of this Act, shall app Iy to the collection and recovery, subject only to the set-off of the amount of any tax repayable under any claim, made under any provision of this Act, which has been agreed to by the Service or determined on an appeal against a refusal to admit any such claim. (3) Where an assessment has become final and conclusive, any tax overpaid shall be repaid or treated as credit in favour of the assessed party. ( 4) Nothing in section 285 of this Act or in this Chapter shall prevent the Service from making any assessment or additional assessment to hydrocarbon tax for any accounting period which does not involve re-opening any issue on the same facts which have been determined for that accounting period, under section 285 (5) and (6) of this Act by agreement or otherwise or on appeal. PART VUl-COLLECTION, RECOVERY AND REPAYMENT OF T A.X

290. Collection of hydrocarbon tax shall, in cases where notice of an Procedure in objection or an appeal has been given, remain in abeyance and any pending cases where proceedings for any payment in instalment shall be stayed until the objection objection or appeal is or appeal is determined but the Service may in any such case, enforce payment pending. of that portion ofthe tax which is not in dispute by an application to the tribunal or court, as the case may be. 291.---( l) Subject to section 2 80 of this Act, hydrocarbon tax for any Time within accounting period shall be payable in equal monthly instalments together with ,rhkh payment is a final ins ta!ment as provided in subsection (4). to be made. A 306 2021 No. 6 Petroleum l11dustry Act, 202 l (2) The first monthly payment shall be due and payable not later than the third month of the accounting period and shall be in an amount equal to one-twelfth or where the accounting period is less than a year, in an amount equal to equal monthly proportion, of the amount of tax estimated to be chargeable for such accounting period in accordance with section 280 (1) of this Act. (3) Each of the remainder of monthly payments to be made subsequent to the payment under subst';ction (2) shall be due and payable not later than the last day of the month in issue and shall be in an amount equal to the ammmt of tax estimated to be chargeable for such period by reference to the latest returns submitted by the company in accordance with section 280 (2) of this Act less so much as has already been paid for such accounting period divided by the number of such of the monthly payments remaining to be made in respect of such accounting period. (4) A final instalment of tax shall be due and payable on or before the due date of filing of the self-assessment of tax for such accou11ting period and shall be the amount of the tax assessed for that accounting period less so much as has already been paid under subsections (2) and (3). (5) Any instalments on account of tax estimated to be chargeable shall be treated as hydrocarbon tax charged and assessed for the purposes of sections 292 and 294 of this Act. Penalty for 292.-( l) Where any hydrocarbon tax or any instalment of tax due and non- payable is not paid within the appropriate time 1imit prescribed in section 291 payment of ofthisAct- tax and enforcement (a) a sum equal to l 0% of the amount of the tax payable shall be added of payment. and the provisions of the Act relating to the collection and recovery of tax shall apply to the collection and recovery of such sum ; (b) the tax due shall incur interest at the prevailing LIBOR or any successor rate, plus 10% from the date when the tax becomes payable until it is paid and the provisions ofthis Act relating to collection and recovery of tax shall apply to the collection and recovery of the interest; (c) the Service shall serve a demand notice upon the company or person in whose name a tax is chargeable and if payment is not made within one month from the date of the service of the demand notice, the Service may proceed to enforce payment under this Act; and (d) an addition imposed under this subsection shall not be deemed to be part of the tax paid for the purpose of claiming relief under any of the provisions of this Act. Petroleum Jndust1y Act, 202 l 2021 No. 6 A307 (2) Any person who without lawful justification or excuse fails to pay hydrocarbon tax within the period of one month prescribed in subsection ( l) (c), commits an offence under this Act and the provisions of subsection (1) (a) to (c) shall apply. (3) The Service may, for any good cause shown, remit the whole or any part of the additional l 0% penalty and interest on the tax due mider subsection ( l ). 2 93.-{ l) Where payment of hydrocarbon tax in whole or in part has Collection of been held in abeyance pending the result of a notice of objection or of appeal, tax aft,;::r the tax outstanding under the assessment as determined on sue h objection or determination ofobjee1ion appeal, as the case may be, shall be payable within one month from the date or appeal. of service on the company assessed or on the person in whose name the company is assessed, of the notification of the tax payable by the Service or Tribunal. (2) Where such balance is not paid within one month, section 292 of this Act shall apply. 294.-{ 1) Hydrocarbon tax may be sued for and recovered in a court of Suit for tax competent jurisdiction at the place at which payment shall be made by the by the Service. Service. (2) In any suit under subsection ( l) the production of a certificate signed by any person duly authorised by the Service giving the name and address of the defendant and the amount of tax due by the defendant shall be sufficient evidence of the amount due.

295.-(l) Where a person who has paid hydrocarbon tax for an Reliefin accounting period alleges that any assessment made upon him or in his name respect of for that period, was excessive by reason of some error or mistake in the error or mistake. accounts, particulars or other written infonnation supplied by him to the Service for the purpose of the assessment, that person may, not later than six years after the end of the accounting period in respect of which the assessment was made, make an application in writing to the Service- (a) for a relief; or ( b) to set-off the credit against the liability of a s imi Iar tax. payable to the Service. (2) On receiving an application under subsection ( I ), the Service shal I inquire into it and subject to the provisions of this section shall by ·way of repayment of tax give such relief or approve tbe set-off in respect of the error or mistake as appears to the Service to be reasonable and just. A 308 2021 No. 6 Petroleum lndusr1:v Act, 202 l (3) A relief shall not be given under this section in respect of an error or mistake as to the basis on which the !iabi!ity of the applicant ought to have been computed where the accounts, particulars or information was in fact made or given on the basis or in accordance with the practice of the Service genera!ly prevai Iing at the time when the accounts, particulars or information was made or given. ( 4) In deterrnining any application under this section, the Service shall have regard to all the relevant circumstances of the case and in particular shall consider whether the granting of re Iief wou Id resu !t in the exc Iusion from charge to tax of any part of the chargeable profits of the applicant and forth is purpose, the Service may take into consideration the liability of the applicant and assessments made upon him in respect of other years. Repaymem 296.-(1) Except as otherwise expressly provided in this Act, a claim of tax. for the repayment of any hydrocarbon tax overpaid shall not be allowed unless it is made in writing within six years next after the end of the accounting period to which it relates. (2) The Service shaH cause to be refunded or set-off at the option of the applicant upon presentation of relevant documents evidencing the tax to be refunded. (3) Any tax claimed based on this section, which is proven not to be due, shall attract a penalty at the prevailing LIBOR or any other successor rate plus 10% from the date the payment or set-off was made up to the date the refund is made by the applicant. pART JX-----0FFENCES AND PENALTIES Penalty for 297.---( I) A person who fails to comply with the provisions of this Chapter defaults. or any regulation made under this Act for which no other penalty is spec ifica!ly provided, shall be liable to an administrative penalty of -N 10,000,000, and where the defau It continues beyond a period stipulated by this Act or regulation, the person shall be Iiable to a further administrative penalty of N2,000,000 or such other sum as may by order be prescribed by the Minister of Finance, for each day the default contllmes. (2) Notwithstanding the provisions of subsection (l ), a person who is found guilty of an offence under this Chapter or in a regulation made under this Act for which no other penalty is spec ifica! ly provided, shal I, on conviction, be liable to a fine of N20,000,000 or other sum as may be prescribed by the Minister of Finance by an order and where the offence continues beyond a period stipulated by this Act onegulation, the person shall be liable to an Petroleum Industry Act, 2021 2021 No. 6 A309 additional fine of N2, 000, 000 or such other sum as may, by order, be prescribed by the Minister ofFinance for each day the default continues, or imprisonment for a term of six months. (3) A pt:rson who- (a) fails to comply with the requirements of a notice served on him under this Chapter; ( b) fails to comply with section 2 77 of this Act, (c) without sufficient cause fails to attend in answer to a notice or summons served on him under this Chapter or having anended fails to answer any question lawfully put to him, or (d) fails to submit any return required to be submitted under section 277 or 281 of this Act, commits an offence. (4) Any violation in respect of which a penalty is provided for in subsection ( l) shall be deemed to occur in Nigeria.

298.-(l) A person who without reasonable exc,i1se- Penalty for making (a) makes up or causes to be made up any incorrect accounts by omitting incorrect or understating any profits or overstating any losses of whi eh he is required accounts. under this Act to make up accounts, ( b) prepares or causes to be p1·epared any incorrect schedule or statement required to be prepared under section 277 of this Act by overstating any -expenditure or overstating any royalties or other sums or by omitting or understating any amounts repaid, refunded, waived or released, or (c) gives or causes to be given any false or misleading information in relation to any matter or thing affecting his Iiab ii ity to hydrocarbon tax, is liable to an administrative penalty of the sum of N 15,000,000 or l % of the amount of tax which has been undercharged in consequence of such incorrect account, schedule, statement or information or would have been so undercharged if the account, schedule, statement or information had been accepted as com::ct, and is also liable for the appropriate tax which would have been charged. (2) Notwithstanding the provisions of subsection ( l) (c), a person who gives or causes to be given any false or misleading infonnation in relation to any matter or thing affecting his liability to hydrocarbon tax, commits an offence and on conviction is Iiable to a fine ofN 15,000,000 or l% of the amount of tax which has been undercharged in consequence of such incorrect account, schedule, statement or information, or would have been so undercharged if the account, A 310 2021 No. 6 Petroleum lndusfly Act, 2021 schedule, statement or information had been accepted as correct and is also liable for the appropriate tax which would have been charged. (3) The Service may compound any offence under this Act by accepting a sum of money not exceeding the maximum fine specified for the offence and shall issue an official receipt for any money so received. False 299.--{1) A person who----- statements and returns. (a) for the purpose of obtaining any deduction, refund, re bate, reduction or repayment in respect of hydrocarbon tax for himself or for any od1er person or who in any return, account, pm1iculars or statement made or furnished with reference to tax, knowingly makes any false statement or false representation or forges or fraudulently alters or uses or fraudulently !ends or allows to be used by any other person any receipt or token as evidence for payment of the tax under this Act; or (b) aids, abets, assists, counsels, incites or induces any other person- (i) to make or deliver any false return or statement under this Act, (ii) to keep or prepare any false accounts or particulars affecting tax, or (iii) unlawfully refuses or neglects to pay tax, commits an offence and is liable on conviction to a fine ofN 15,000,000 or I% of the amount of tax for which the person assessable is liable under this Act for the accounting period in respect of or during which the offence was committed, or to imprisonment for six months or to both the fine and imprisonment and is also liable for the appropriate hydrocarbon tax which would have been assessed and charged. (2)Notwithstanding the provisions of subsection (1), any person who does any of the acts or makes the omissions contained in subsection ( 1), may be liable to an administrative penalty ofN 15,000,000 or I% of the amount of hydrocarbon tax for which tbe person assessable is liable under this Act for the accounting period in respect ofor during which the act or omission occurred and shal ! sti 11 be liable for appropriate tax which would have been assessed and charged. Penalties for 300. A person who,- offences by authorised or (a) being a member of the Service charged with the administration of unmJthorised this Act or any assistant employed in connection with the assessment and persons. collection of the hydrocarbon tax who----- (i) demands from any person an amount in excess of the authorised assessment of the tax payable, (ii) withholds for his own use or otherwise any portion of the amount of tax collected, Petroleum Industry Act, 2021 2021 No. 6 A311 (iii) renders a false return, whether verbal or in writing of the amounts of tax collected or received by him, or (iv) defrauds any person, embezzles any money or otherwise uses his position to deal wrongfully with the Service or any other individual; or ( b) not be i:ng authorised under this Act, co Ilee ts or attempts to collect the tax under this Act, commits an offence and is liable on conviction to a fine equivalent to 200% of the sum in question or to imprisonment for a term not exceeding three years or to both such fine and imprisonment_

301. The institution of proceedings for or the im position of a pen al ty, Tax to be fine or term of imprisonment under this Act sha 11 not re Iieve any person payable no1withsmndlng of liability to payment of any hydrocarbon tax for which he is or may any become liable. proceedings for penalties. PART X-APPLICATION OF COMPANIES INCOME TAX TO PETROLEUM OPERATIONS

302. (1) Without prejudice to Companies Income Tax Act and any other General applicable law, the provisions of this Act shall apply and any company, requirement of concessionaire, licensee, lessee, contractor or subcontractor involved in the companies upstream, midstream or downstream petroleum operations under this Act, engaged in shall also be subject to the Companies Income Tax Act. petroleum operations (2) For the purpose of determining the value of chargeable crude o= 1 or to pay chargeable gas, in relation to any accounting period, the crude oil and gas companies revenue of a company for that period shall be the value of any chargeable oil incometa"I:. or chargeable gas adjusted to the measurement points, based on the- Cap. C2I. LFN, 2004. (a) proceeds of all chargeable oil or gas sold by the company ; and (b) value of all i;hargeable oil or gas disposed by the company. (3) Subject to sections 142 (2) and 197 (2) of this Act, a person intending to be involved ln more than one stream, that is upstream, midstream or downstream petroleum operations shall register and use a separate cc}'ni:any for each stream of petroleum operations under this Act provided that, for corn pan ies with petr::;leum mining Ieases selected under section 93 (6) (b) and (7) (b) of this Act, no stamp duties and capital gains tax shall be levied by Government on such segregation. (4) For strategic projects in the upstream petro Ie um operations that seek to produce oil and natural gas to be processed or refined to finished petroleum products, and supplied in wholesale solely to the domestic market, such projects shal I have the option to be estab Iish ed as an integrated strategic project (ISP), \Vhereby the capital investment in the associated midstream petroleum A 312 2021 No. 6 Petroleum Indusl!y Act, 2021 operations as defined under this Act, can be consolidated with the upstream petroleum operations for purposes of tax, and where an ISP option is elected, the following provisions sbal I apply- (a) arms-length transfer prices shall be established to fiscalise the hydrocarbons transferred from the upstream petroleum operations to the midstream petroleum operations; and (b) capitaUnvestment in the midstream petroleum operations consolidated with upstream petroleum operations cannot be represented for capital allowances when fisca!ising the income from midstream petroleum operations. (5) In determining the companies income tax, the hydrocarbon tax under this Act sha!l not be deductible. (6) All companies engaged in domestic midstream petroleum operations, Cap. C2L downstream gas operations and Iarge-sca Ie gas ut i!isat ion industries as defined LFN. 2004. in this Act, sha!! be entitled to benefit from the iricentives provided under section 39 of the Companies Income Tax Act, and investors in gas pipeline will be granted an additional tax-free period of five years at the expiration of the tax-free period granted in section 39 of the Companies Income Tax Act. Cap. C2L (7) Natura! gas transferred or disposed from the upstream to the LFN. 2004. midstream or downstream shall be subject to tax under the Companies Income Tax Act. (8) Natural gas liquids and liquid petroleum gases derived from natural gas shall be subject to companies income tax. (9) Acquisition costs of petroleum rights shall be eligible for annual allowance at the rate of20% with a retention value of I% in the last year until the asset is disposed. (10) Capita! allowances for other assets shall be granted as follows- Fifth (a) upstream petroleum operations assets shall be in accordance with SchcdLJk. the Fifth Schedule to this Act ; and Cap. C2l. (b) midstream and downstream operations shall be in accordance with LFN. 2004. the Second Schedule to the Companies Income Tax Act. (11) Section 24 of the Companies Income Tax Act shall be read in conjunction with the follmving provisions ofthisAct- (a) all rents and royalties the liability for which was incurred by the company during that period in respect of crude oil sold, condensate so!d and natural gas sold or delivered or disposed of in any other commercial manner and where a petroleum mining lease includes payments to the Petroleum Industry Act, 2021 2021 No. 6 A 313 Federation Account related to production sharing, profit sharing, risk service contracts or other contractua 1features and the corn pany has incurred 1iabi Iity for such payments and such payments were made ; (b) any amount contributed to any fund, scheme or airnngement approved by the Commission or Authority for the purpose of providing for- (i) abandonment and decommissioning, (ii) petroleum host communities development trust, or (iii) en vironmenta I remed iati on ; and (c) other deductions as may be prescribed by the Minister of Finance by order published in the Federal Government Ga::erre. (12) Section 27 of the Companies Income Tax Act shall be read in Cap. C2\. conjunction with the following prnvisions of this Act- LFN. 20()..\. (a) any expenditure for the purchase of infonnation relating to the existence and extent of petroleum deposits, other than for the acquisition of geological, geophysical and geochemical data or information; (b) any expenditure incurred as a penalty including natural gas flare fees or any such imposition relating to natt1ra I gas flare; (c) production bonuses, signature bonuses paid for the acquisition of, or ofrigbts in or over, petroleum deposits; signature bonuses or fees paid for renewing petroleum 1nln ing lease or petroleum prospecting !icence or fees pa id for assigning rights to a not her party inc!ud ing for margina I fie Ids ; and (d) any tax inputed into a contract or an agreement on a net tax basis and paid by a company on behalf of the vendor or contractor. ( 13) Any company involved in upstream petroleum operations shall apply the accounting periods established for hydrocarbon tax on an actual year basis for its company's income tax in accordance with sections 277,280 and 291 of this Act. (14) Any company involved in upstream petroleum operations that is in de fau !t of subsection ( 13) in relation to filing of cmnpan ies income tax returns, shall be Iiable to pay a penalty for late filing as fo!iows- (a) N 10,000,000 on the first day the failure occurs and N2,000,000 for each and every subsequent day in which the failure continues; or (b) other sum as may be prescribed by the Minister of Finance by order published in the Federal Government Gazette. (15) Offences and penalties specified under Part IX of this Chapter sha 11 be app Iicab le to companies income tax of upstream petro le urn companies. A 314 2021 No. 6 Petroleum Jndmtry Act, 2021 (I 6) The tax due from a company involved in upstream petroleum operations shal! in the case of- (a) Nairn remittances, carry interest at the prevailing NIB OR plus 10% from the date when the tax becomes payable until it is paid, and (b) foreign currency remittances, incur interest at the prevailing LIBOR or any successor rate plus 10% from the date when the tax becomes payable until it is paid, and the provisions of this Act relating to collection and recovery of tax shall apply to the col!ection and recovery of the interest. ( 17) Furthermore upstream petroleum operations shall be subject to the following provisions- (a) where, for any accounting period of a company, the amount of the chargeable tax for that period, calculated in accordance with this section other than this subsection, is less than the amount mentioned in paragraph (b ), the company shal ! be liable to pay an additional amount of chargeable tax for that period equal to the difference between those two amounts ; ( b) the amount referred to in paragraph (a) is, for any accounting period of a company, the amount which the chargeable tax for crude oil or gas for that period, calculated in accordance with this section, would come to if the reference in subsection (2) (a) and (b), to the proceeds of sale or disposal were a reference to the amount obtained by multiplying the number of barrels of that crude oil or gas determined at the measurement point by the fiscal oil per barrel or fiscal gas per MMBtu ; (c) for the purpose of paragraph (6), the relevant sum per barre! of crude oil, condensate or gas per MMBtu by a company is the fiscal oil price or fi seal gas price applicable to that crude oil or gas as may be estab Iished by the Commission ; (d) the whole ofany additional chargeable tax for crude oil or chargeable gas payable by a company by virtue of this subsection for any accounting period shall be payable concurrently with the final instalment of the chargeable tax payable for that period ; (e) where there is no fiscal oil price or fiscal gas price established for a crude oil stream or gas, the Commission shal! establish fiscal oil price or fiscal gas price for such stream and every fiscal oil or gas price established shall bear a fair and reasonable relationship--- (i) to the established fiscal oil or gas price ofNigerian crude oil streams or gas of comparable quality and specific gravity, or ,• // ,:.. Petroleum Industry Act, 2021 2021 No. 6 A 315 (ii) where there are no such Nigerian crude oil streams or gas of comparable quality and specific gravity it shal I bear a fair and reasonable relationship to the official selling prices at main international trading centers forcnidc oil or gas of comparable quality and gravity, due regard being had in either case to freight differentials and other relevant factors ; and (f) where any crude oil or gas, which in relation to a particular company is its chargeable oil or chargeable gas, is expo1ied from Nigeria by another corn pany, that crude o i! or gas shal I for the purpose of this section be deemed to be exported from Nigeria by that particular company. PART Xl--GENERAL PROVIS.IONS 303.--(l) The provisions of this Act shal! not apply to holders of an oil General prospecting licence or oil mining lease \.Vho do not enter into a conversion application of this Part contract until the termination or expiration of the respective oil prospecting and other licence or oil mining lease save for the provisions of section 311 and paragraphs matters. I O and 11 of the Seventh Scbedu le to this Act \Vhich shall apply to licences Se\·enth and leases awarded to indigenous Nigerian companies on a sole risk basis Schedule. under the Petro !eum Act, on which the Government has successfully exercised Cap. PIO. its back-in rights prior to the effective date of this Act but any renewal of an LFN. 2004. oil mining lease shall be based on this Act. (2) The fiscal provisions of this Act are the base terms that are applicable and the Commission may under section 74 (2) of this Act conduct a licensing round whereby the bid parameter is a higher royalty, profit oil share or other fiscal features in order to ensure that the Government receives the fol! market value for each block. 304.--( I) Where matters relate to hydrocarbon tax and companies income Regulations. tax, the Minister of Finance may make regulations for the carrying out of the rules and provisions of this Act and the Service may make rules and specify the form of forms. returns, claims, statements and notices under this Act. (2) Where matters relate to fees, rents, royalties and payments to Government other than taxes and duties, the Comrnission may make regulations and rules generally for the carrying out of the provisions of this Act. (3) Where matters relate to the environment, the Commission and Authority shall have responsibility over all environmental matters in respect of upstream petroleum operations and midstream and dO\vnstream respectively except in relation to environmental impact assessment which shall be in accordance with applicable laws. A 316 2021 No. 6 Petroleum Industry Act. 2021 Fiscal 305. Fiscal stabilisation clauses contt:ined in any production sharing stabilisation. contract or other contract entered into after the commencement of this Act shall not be applicable to the fiscal provisions listed in this section, regardless of whether these changes affect the contractor favorably or unfavorably, if changes are being made in a manner that is not discriminatory to the petroleum industry or the contractor and the respective fiscal provisions are~ (a) generally applicable taxes, such as withholding taxes, companies income tax, tertiary education tax and VAT; (b) levies, taxes or payments to comply with moderi1 principles in respect of environment, labour laws, health and safety ; and (c) new taxes, levies or duties to i111plement Nigeria's commitments with respect to c Ii mate change under the United Nati ons Framework Convent ion on Climate Change and other related international agreements. Royalty. 306. Al! production of petroleum, including production tests shall be Se\'enth subject to royalties as provided in the Seventh Schedule to this Act. Schedule. CHAPTER 5-MISCELLANEOUS PROVISIONS Legal 307.-( 1) The provisions of the Public Officers Protection Act shall proceedings. app!y in relation to any suit instituted against the Commission or the Authority, Cap. P-11. the Commission Chief Executive or the Authority Chief Executive, any LFN. 200-1. cornmi ss ioner or director, officer or ernp loyee of the Commission or Authority. (2) No action, claim, proceeding or suit sha!l lie or be commenced against the Commission or the Authority, the Commission Chief Executive or Authority Chief Executive, any commissioner or director or any other employee or officer of the Commission or Authority, for any act done, attempted to be done or omitted to be done under this Act or any other law or enactment or of any public duty or authority in respect of any alleged neglect or default in the execution of this Act or any other law or enactment, duty or authority or be instituted in any court unless it is commenced ,vithin three months after the accrual of any cause of action in respect of any such act, neglect or default and provided such act or omission was not done in good faith. Pre-action 308.-(1) A suit shall not be commenced against the Commission or notiee. Authority or any officer of the Commission or Authority, before the expiration of a period of one month after a written notice of the intention to commence the suit has been served on the Commission or the Authority. (2) The notice referred to in subsection ( l) shall state the cause of action, the particulars of claim, the name and address of the claimant and the re! iefs sought. Petroleum JndustJy Act, 1021 2021 No. 6 A 317 (3) A notice, summons or other document required or authorised to be served on the Commission or Authority under this Act or any other law or enactment, may be served by delivering it to the office of the Commission Chief Executive or the Authority Chief Executive. (4) An order for execution or attachment of any property of the Commission or Authority shall not be issued unless a three months· notice of the intention to commence execution process has been given to the Commission or Authority.

309. Subject to the Constitution of the Federal Republic of Nigeria, Consequential 1999, upon the commencement of this Act, where the provisions of any omendments. other enactment or law except the Nigeria Oil and Gas Industry Content Cap. C23. LFN. 2004. Development Act are inconsistent with the provisions of this Act, the provisions of this Act shall prevail and the provisions of that other enactment Act No. 2. or law shall, to the extent of that inconsistency, be void in relation to matters 20!0. provided for in this Act.

310.-(1) From the effective date of this Act the following enactments Repeals. and regulations are repealed~ (a) Associated Gas Reinjection Act, 1979, Cap. A25, Laws of the Federation ofN igeria, 2004, and its Amendments ; (b) Hydrocarbon Oil Refineries Act No. 17 of 1965, Cap. I-IS, Laws of the Federation of Nigeria, 2004; · (c) Motor Spirits (Returns) Act, Cap. M20, Laws of the Federation of Nigeria, 2004 ; (d) Nigerian National Petroleum Corporation (Projects) Act No. 94 of 1993, Cap. Nl24, Laws oftbe Federation ofNigeria, 2004; (e) Nigerian National Petroleum Corporation Act (NNPC) 1977 No. 33, Cap. N123, Laws of the Federation of Nigeria as amended, when NNPC ceases to exist under section 54 (3) of this Act ; (f) Petroleum Products Pricing Regulatory Agency (Establishment) Act No. 8, 2003; (g) upon the completion of the conversion process under section 92, the Petroleum Profit Tax Act, Cap. P 13, LFN, 2004, provided the repeal shall apply from the effective date to any new acreage granted under this Act; and (h) upon the completion of the conversion process under section 92, the Deep Offshore and Inland Basin Production Sharing Contract Act, 20 J9, as amended, provided the repeal shall apply from the effective date to any new acreage granted under this Act. A 318 2021 No. 6 Petroleum lndushy Act, 2021 (2) With respect to the Petroleum Equalisation Fund, the Authority as of the Effective Date shall be in charge of- (a) the collection of net surplus revenues from oi! marketing companies shall cease, except for the collection of unpaid net surplus revenues earned prior to the effective date ; and (b) the payment for reimbursements to oil marketing companies shall cease, except for possible remaining payment obligations incurred prior to the effective date. (3) Where the Petroleum Equalisation Fund is insufficient to make the payments under subsection (2) (b), the Authority may prorate the amounts payable based on the ratio between the funds remaining and the outstanding payables, provided that \Vhere the Petroleum Equalisation Fund is in a deficit, the proration sha!l be zero, and oi I marketing companies sha!I have no claim as to further outstanding amounts, (4) Any amount remaining in the Petroleum Equalisation Fund after the completion of the transactions under subsections (2) (a), (b) and (3) shall be transferred to the Midstream and Dov,-nstream Gas Infrastmcture Fund. Saving 311.-{ I) Any Act, subsidiary leg is Iation or regulation, guide! ine, directive pro,-isions. and order made under any principal legislation repealed or amended by this Act, shall, in so far as it is not inconsistent with this Act, continue in force mutatis mutandis as if they had been issued by the Commission or Authority under this Act until revoked or replaced by an amendment to this Act or by subsidiary legis !ation made under this Act and shal ! be deemed for a! I purposes to have been made under this Act. Cap. PIO. (2) Any oil prospecting licence or oil mining lease granted under the LFN. 200..i. Petroleum Act, that is subsisting as at the effective date of this Act shall continue to have effect, subject to the following terms and conditions- (a) with respect to renewed leases renegotiated production sharing contracts with in the period specified in this section, the fo Ilowing conditions shall apply,- (i) where negotiations of the contracts are continuing upon the effective date of this Act, such contracts shal ! be signed within one year of the effective date and in the event offai lure to complete the negotiations within one year of the effective date, such contract shall be deemed to conform to the prov[sions of this Act at the expiration of the lease, (ii) where the contracts were or are signed by NNPC, the leases shall be assigned to NNPC Limited without prior approval of the contractor and NNPC Limited shall continue its role as concessionaire under such leases, NNPC shall by written notice notify the contractor of such assignment, Petroleum Industry Act, 2021 2021 No. 6 A319 (iiI) the renewed ieases renegotiated production sharing contracts, shall not feature any investment tax credits unless such investment tax credits are carried forward as part of a renegotiation of a production sharing contract with in the period specified in this section and shal Ifeature a cost oil limit of not more than 60% of the total oil production, a minimum of 55% haircut on disputed ainount and for the purpose of determining the profit oil share based on cumulative production. the production from the total production of all production areas selected under section 93 of the Act shall be used, (ivf the contracts and leases shall continue to be subject to the legislation under subsection (9), provided that such leases shall be subject to section 93 of this Act and in this respect the conversion date for the purpose ofthe interpretation of section 93 of this Act shall be the signing date of such renegotiated production sharing contracts, and (v) upon expiration or terminations, the leases and renegotiated production sharing contracts can only be re11ewed on the basis of the provisions of this Act; (b) any oil prospecting licence and oil mining lease that is being conve11ed shall be conve1ted under section 92 (1) - (5) and (7) of this Act; (c) with respect to other oil prospecting licences and oil mining leases that do not wish to convert under section 92 ( 6), section 303 (2) ofthis Act and subsection (9) of this section shall apply and the domestic gas price that is the applicable gas prices established prior to the effective date of this Act and for licence and leases awarded to indigenous Nigerian companies on a soie risk basis under the Petroleum Act on which the Government has Cap. P!O, successfully exercised its back-in rights prior to the effective date of tbis LFN, 2004. Act, section 92 (5) of this Act shall apply save for the royalty which shall be 0% per field for the period of five years from the date of commencement of the field production including all relevant accounting period prior to the effective date and section 311 (9) (d) of this Act, any Act, subsidiary le gislatio 11 or regulation, guideline, directive or order saved under this Act shall be deemed amended accordingly ; and (d) contractors ofNNPC, oil prospecting licences and oil mining leases shall be subject to sections 232 and 233 of this Act. (3) Any other licence, lease, certificate, authority or permit which was issued by the Department of Petroleum Resources, Petroleum Products Pricing and Regulatory Agency or Petroleum Equalisation Fund, as the case may be and which had effect immediately before the effective date shall continue to have effect, mutatis mutandis, for the remainder of its period of validity as if it had been issued by the Commission or Authority. A 320 2021 No. 6 Petroleum Industry Act, 2021 (4) Any tariff, price, levy, or surcharge which was payable to the Department of Petroleum Resources. Petroleum Products Pricing and Regu latmy Agency or Petro !eum Equalisation Fund prior to the effectiv c date shall continue in force until the expiration of the term of the said tariff, price, levy, or surcharge, or until alternative provisions are made under this Act or any regulations made under it, whichever is earlier. (5) Pending the decision of the Authority under sections 125 (6) and l 7•1 ( 6) of this Act, the existing licence, perm it or right shal I continue i11 force as if it had been issued under this Act. (6) Any other pennit or other right in respect ofany sector of the petroleum industry to which subsections (2), (3) and (4) do not apply and that has been granted by the Department of Petroleum Resources, Petroleum Pricing and Product Regulatory Agency or Petroleum Equalisation Fund, as the case may be, and which is still in existence on the effective date, shall continue in force for the remainder of its duration as if it had been issued under this Act. (7) With respect to subsection (4), any payments under Chapter 2 of tI1is Act shall be applicable to the respective licensees and holders of permits and rights. (8) With in three months from the effective date, the Minister ofPetroleum on the advice of the Commission or Authority, may make any further transitional and savings provisions that are necessary or desirable, provided that such provisions are consistent with the transitional and savings provisions in this Act. (9) Notwithstanding the provisions of section 3 I0 of this Act, d1e following laws shall be saved until the termination or expiration of all oil prospecting licences and oil mining leases under subsection (2) (c}- (a) Petroleum Act, Cap. Pl0, Laws of the Federation of Nigeria, 2004; (b) Petroleum Profit Tax Act, Cap. P13, Laws of the Federation of Nigeria, 2004; (c) Oil Pipelines Act, Cap. 07, Laws of the Federation of Nigeria, 2004 and any subsidiary legislation shall, in so far as it is consistent with this Act, remain in operation until it is repealed or revoked and shall be deemed for all purposes to have been made under this Act ; (d) Deep Offshore and Inland Basin Production Sharing Contracts Act, Cap. D3, Laws of the Federation of Nigeria, 2004 and its Amendment ; and (e) any other law or regu Iat ions that are consistent with the princip Jes of section 92 (6) of this Act. Petroleum industry Act, 2021 2021 No. 6 A321 (10) Subject to sections 125 (6) and I 74 (6) of this Act, parties to gas sa !es agreements related to domestic sales or exports entered into prior to the effective date shall be entitled to continue such agreements unaltered until the termination of such agreements, provided, however, that such agreements shal I be submitted for review to the Authority and the Commission and where so ordered by the Authority or Commission, as the case may be, amendments shall be made in such agreements to comply with the Act.

312.-(1) The Commission shall be vested with all assets, funds, Transfer of resources and other movable and immovable properties which immediately [lssets and liability to before the effective date were held by the Petroleum Inspectorate or the the Department of Petroleum Resources. Commission. (2) The rights, interests, obligations and liabilities of the Petroleum Inspectorate and Depa11ment of Petroleum Resources existing immediately before the effective date under any contract or instrument or law or in equity are assigned to and vested in the Commission. (3) Any contractor instrument covered by subsection (2) shall be of the same force and effect against or in favour of the Commission and shall be enforceable as fully and effectively as ifinstead of the Petroleum Inspectorate or Department of Petroleum Resources, the Commission had been named therein or had been a party thereto. (4) The Commission shall be subject to all the obligations and Iiabilities to which the Petroleum Inspectorate and Department of Petroleum Resources were subject immediately before the effective date and all other persons shall as from the effective date have the same rights, powers and remedies against the Commission as they had against the Petroleum Inspectorate or Department of Petroleum Resources immediately before the effective date. 313.-{ I) The Authority shall be vested with all assets, funds, resources Transfer of and other movable and immovable properties, which immediately before the assets and effective date were held by the Petroleum Pricing and Product Regulatory liability to the Agency, the Petroleum Equalisation fund (Management Board) and the Authority. relevant assets, funds, resources and other movable and immovable properties held by Department of Petroleum Resources, the Petroleum Pricing and Product Regulatory Agency, and the Petroleum Equalisation Fund {Management Board). (2) The rights, interests, obligations and liabilities of the Department of Petroleum Resources, the Petroleum Pricing and Product Regulatory Agency, and the Petroleum Equalisation Fund (Management Board) existing immediately before the effective date under any contract or instrument or law or in equity are assigned to and vested in the Authority. A 322 2021 No. 6 Petroleum Industry·Act, 2021 (3) Any contract or instrument covered by subsection (2) shall be of the same force and effect against or in favour of the Authority and shall be enforceable as fully and effectively as ifinstead of the Department of Petroleum Resources, the Petroleum Pricing and Product Regulatory Agency, and the Petroleum Equalisation Fund (Management Board) had been named therein or had been a party thereto. (4) The Authority shall be subject to all the o b Iigations and liab i1ities to which the Petroleum Pricing and Product Regulatory Agency, the Petroleum Equalisation Fund (Management Board) and the relevant divisions of Department of Petroleum Resources, were subject immediately before the effective date and all other persons shall as from the effective date bave the same rights, powers and remedies against the Authority as they had against the Petroleum Pricing and Product Regulatory Agency, the Petroleum Equalisation Fund (Management Board) and the relevant divisions of Department of Petroleum Resources inunediately before the effective date. Transfer of 314.-(1) From the effective date, employees in the relevant divisions employees in the Petroleum Inspectorate or the Department of Petroleum Resources and conditions of shall be employees of the Commission on terms no less favourable to those in service. effect immediately prior to such transfer, and all years of service with the Petroleum Inspectorate or the Department of Petroleum Resources.; as applicable, shall be deemed to be years of service qualifying for employment- related entitlements under any applicable law. (2) The Commission shall assume and continue to fulfil all statutory obligations in respect of pension schemes to which the Petroleum Inspectorate or the Department of Petroleum Resources, as applicable, was obliged in respect of its employees, ptior to the effective date. (3) From the effective date, employees in the relevant divisions of the Depa1tment of Petroleum Resources, the Petroleum Pricing and Product Regulatory Agency, and the Petroleum Equalisation Fund (Management Board), shall be employees of the Authority on terms no less favourable to those in effect immediately prior to the effective date, and a Hyears of service with the Department of Petroleum Resources, the Petroleum Pricing and Product Regulatory Agency or the Petroleum Equalisation Fund (Management Board), as applicable, shall be deemed to be years of service qualifying for employment-related e11titlements under any applicable law. ( 4) The Authority shall assume and continue to fo lfil all statntory obligations in respect of pens io11 schemes to which the Department of Petroleum Resources, the Petroleum Pricing and Product Regulatory Agency and the Petroleum Equalisation Fund (Management Board), as applicable, was obliged in respect of its e1np!oyees, prior to the effective date. Petroleum Industry Act, 202 ! 2021 No. 6 A323

315. As part of the implementation process of sections 3 I 3 and 57 of Movement this Act, the Minister may within 24 months of the effective date cause an of staff of inter-agency transfer of any staff of the institutions listed below to the the institutions. Commission, the Authority or NNPC Limited based on ski 11 s and corn petence requirements of the new institutions, if the skills and competence of the said staff are most suitable in any of the successor institutions during the implementation process~ (a) Department of Petroleum Resources ; (b) Nigerian National Petroleum Corporation and any of its subsidiaries ; (c} Petroleum Equalisation Fund; (d) Petroleum Inspectorate ; and (e) Petroleum Products Pricing and Regulatory Authority. 316.---{l) Every sett!or shall transfer any existing host communities Transfer of development project or scheme under its corporate social responsibility or existing host communities memorandum of understanding or any other agreement to a host communities development development trust established under this Act. projects and (2) Every applicable settler shall notify the Commission or Authority, as host communities the case may be, upon completion of any transfer under subsection ( l) to any development one or more host communities development trusts of any of its existing host schemes. communities development projects or schemes. (3) Any financia I contribution made by a sett Ior from the effective date until the date falling 12 months after the effective date to any ongoing host communities development project or scheme in accordance with their terms, shall be deemed to constitute a contribution made by such holder or holder nominee under section 240 (2) of this.Act. 317,-( I) Anything made or done, or having effect as if made or done, Transitional before the effective date of this Act under or pursuant to any provision of the and S[I.Yings proYisions. Petroleum Act, the Fetroleum Profit Tax Act and the Deep Offshore and Cap. PIO. Inland Basin Production Sharing Contract Act by the Service and having any LFN, 2004. continuing or resulting effect with respect to the taxation of the profits of a Cap. Pl3. company or any matter connected to it, shall be treated and for all purposes LFN. 2004. shall have effect as if it were made or done by the Service under the Cap. D3. corresponding provisions of this Act. LFN, 2004. (2) All rules, orders, notices or other subsidiary legislation made under the Petroleum Act, the Petroleum Profits Tax Act, and the Deep Offshore and In land Basin Production Sharing Contract Act shall continue to have effect as if made under the corresponding provisions of this Act A 324 2021 No. 6 Petroleum lnduslry Act, 2021 (3) Al I references in any other enactment to provisions of the Petroleum Act, rhe Petroleum Profits Tax Act and the Deep Offshore and Jnlan<l Basin Production Sharing Contract Act shall be construed as references to the corresponding provisions of this Act. ( 4) With respect to petroleum mining leases selected under section 93 (6) (b) and (7) (b) of this Act, any capital allowances existing at the effective date for the related oil mining !eases shall be carried over to the selected petroleum mining leases, provided the a 1lowances relate to upstream petro !eum operations and do not include investment tax allowances and investment tax credits. (5) Subject to section 303 (1) of this Act, the provisions of Chapter 4, Parts II and X of this Act shall apply upon the commencement of the first accounting period fo Ilowing the effective date. (6) From the effective date, the Government on behalf of the Federation may request the services of NN PC Lim itcd as su pp! ier of last resort to ensure adequate supply and distribution of premium motor spirit (PMS) for a period not exceeding six months and all associated costs shall be for the account of the Federation. (7) The Minister shall set forward a clear transition plan within 60 days of the effective date of the Actto prevent disruptions of the industry operations. (8) The Authority may apply the Backward Integration Policy in the downstream petroleum sector to encourage investment in local refining. (9) Pursuant to subsection (8), licence to import any product shortfalls may be assigned to companies with active local refining licences or proven track records of international crude oil and petroleum products trading. ( 10) Import volume to be allocated between participants shall be based on criteria to be set by the Authority taking into account the respective refining output in the preceding quarter, share of active wholesale customers competitive pricing and prudent supply, storage and distribution track records. ( 11) To safeguard the health of Nigerians, imported petroleum products shall conform to the Afri-5 Specification (50 ppm Sulphur) as per the ECOWAS declaration of February, 2020 on adoption of the Afri~Fuels Roadmap or as may be prescribed by regulation. Interpretation. 318. In this Act- "accounting date'' means the date on which a company usually prepares its accounting statement; -, Petroleum Industry Act, 202 l 2021 No. 6 A325 "accounting period" in relation to a company engaged in upstream petroleum operations, means- (a) a period of one year commencing on I st January and ending on 31 st December of the same year, (b) any shorter period commencing on tbe day the company first makes a sale or bulk disposal of chargeable oil, domestic, export or t oth, and ending on 3 1st December of the same year, or (c) any period of less than a year being a period commencing on 1st January of any year and ending on the date in the same year wher:. the company ceases to be engaged in petroleum operations, and in the event of any dispute with respect to the date of the first sale of chargeable oil above or with respect to tl1e date on which the company ceases to be engaged in petroleum operations, the Commission shall determine the same and no appeal shall lie; "Act" means the Petroleum Industry Act, 2021 ; "adjusted profits" means adjusted profit as str:ted in section 262 of this Act; "advis01y committee" has the meaning given to it in section 249 of this Act; "cif.filiare" means the relationship that exists between two persons when one controls-or is controlled by, an entity which controls, the other person, where 'control' means the direct or indirect ownership of more than 50% of the voting rights in a company, partnership or legal entity; "aggregate gas price" means lhe gas price determined under section 167 (4) ofthisAct; "appraisal well" means a well that in the opinion of the Commission is aimed at detennining the size, distribution, charncteristics and commerci 11 ity of a petroleum discovery ; "area of operation" means the territory which hosts a lessee's or licensee's operational or designated facilities and any other ancillary facilities related to upstream and midstream petroleum operations; "assessable profit" means assessable profit as stated in section 262 of this Act; "assodated gas" means- (a) natural gas, commonly kna-.vn as gas-cap gas, which overlies and is in contact with crude oi I in a reserve ir ; and (b) soluti_on gas dissolved in crude oil in a reservoir and emerJing from the fluid as pressure drops ; A 326 2021 No. 6 Petroleum Industry Act, 2021 "authorisation" means approval issued by the Commission or Authority for an activity in the petroleum industry; .;Authority" means the Nigerian Mid stream and Downstream Petroleum Regulatory Authority" as provided for in this Act; "Authority Fund" means the Fund established under section 47 of this Act; ~ "barrel" means a barrel of 42 United States gallons; "Board" means the governing board of the Commission, Authority, NNPC Limited or an incorporated joint venture company (IJVC) ; "Board o/Tiw;tees" means the governing board of the trust established under section 242 of this Act; "bulk gas storage licence" means a licence granted under section 132 of this Act; "capital fund" means the fund avai !able to the Board of Trustees of a host communities development tmst for communities <level op ment projects and other matters on behalf of the holder or holders as provided for in this Act; "chargeable oil" means crude oil, condensate or natural gas liquids produced upstream of the measurement point as provided for under section 260 ( 1) (a) of this Act; ''chargeable profit" means chargeable profit as stated in section 262 of this Act; "chargeable tax" means chargeable tax as stated in section 267 of this Act; ';chargeable volume" in relation to a company engaged in upstream petroleum operations means the chargeable volume as set out in paragraph 7 of the Seventh Schedule to this Act; ;·commercial discovery" means a discovery of crude oil, i:iatural gas or condensates within a petroleum prospecting licence or petroleum mining lease which can be economically developed in the opinion of the licensee or lessee after consideration of aI! relevant economic factors normal !y applied for the evaluation and development of crude oil, natural gas or condensate; ··Commission" means the Nigerian Upstream Petroleum Regulatory Commission established under this Act; ·'common carrier" means a transportation pipeline which is operated on an open access basis ; '·Commission F1111d'' means the fund established under section 24 of 1lii-;Act; Petroleum Industry Act, 202 l 2021 No. 6 A327 "company" means in this Act, any company or corporation, other than a corporation sole, incorporated under the Companies and Allied MaJers Act, Act No. 3, 2020 ; "condensate" means a portion of natural gas of such composition thnt are in the gaseous phase at temperature and pr~ssure of the reservoirs. but that, when produced, are in the liquid phase at surface pressure and temperature ; ';connecrion agreement" means an agreement setting out the terms on which individual, physical connections to t'1e transportation pip!:!: ine, transportation network or gas distribution network will be effected and matters such as the configuration, pressure, t<;!clmical parameters and cost of the connection; "ConstUution" means the Constitution of the Federal Republic ofNig ~ria, 1999, Cap. C23, Laws of the Federation ofNigeria, 2004; ., "conversion contract" means a contract uri der section 92 of this / ,et ; "coi1version date" means the date under section 92 of this Act ; . "Corporate Affairs Commission" means the Corporate Affairs Commission estab Iished under the Companies and Al lied Matters Act, Act No. 3, 2020; "corrupt practices and money laundering laws" means- (a) the Iaws of the Government in respect of bribery, kickbacks and comipt business practices, (b) the Foreign Corrupt Practices Act of 1977 of the United Statc:s of America (Pub. L. No. 95-213 §§ I 0 1-104 et. seq.), (c) the OECD Convention on Combating Bribery of Foreign Prblic Officials in International Business Transactions, signed in Paris 0-_1 17 December, 1997, which entered into force on 15 February, 1999, and the Convention's Commentaries, (d) the United Kingdom Bribery Act, 20 I 0, and ( e) any other law of general application relating to bribery, kickb.1eks or corrupt business practices ; "Co1mcil" means the Governing Counc:. e3tab!ished under sectio 1 52 (3) of this Act; · "crude air' means petroleum, which r:'.; in Iiquid conditions upon produc· tion from a reservoir either in its natural state or after the extraction of w 1ter, sand or other foreign substance from :t, but b::fore any such oi! has been refined or othenvise treated, other than oi I extracted by destructive disti 11/tion from coal, bituminous shales or other strntifiec'. deposits; 1 "crude oil refiner" means the holder of a crude oil refining licence l!nder section 183 of this Act; I. A 328 2021 No. 6 Petroleum Industry Act, 2021 "customary court" means a customary court established by the applicable laws of a State of the Federation or the Federal Capital Territory; "customer client" means a wholesale customer of the strategic sector who is a client of the domestic gas aggregator making use of the escrow account mechanism ; "customer client , 1olume" is the volume of natural gas that is paid for by a customer client for the benefit of a specific producer client into the escrow account of the domestic gas aggregator in any one month ; "customer protection" means the standards, practices and service protections for customers including, those relating to pricing, service quality and standards, billing practices, performance reporting and any regulations of the Commission and Authority that provide such protections ; "decommissioning and abandonmem" means the approved process of cessation of operations of crude o ii and natural gas wells, installations, plants and structures, including shutting down an installation's operations and production, total or partial removal of installations and structures where applicable, chemicals and all such other materials handling. removal and disposal or debris and removed items, environmental restoration ofthe area after removal of installations, plants and structures. and 'decommission' has a corresponding meaning ; "decommissioning and abandonment fund'' has the meaning given to it in section 23 3 of this Act ; "'decommissioning and abandonment plan" means the plan to be submitted in the field development plan under section 79 {2) for upstream petroleum operations and um;ler section l l l (3) of this Act for midstream petroleum operations ; "'deep offshore" means any area within the territorfal waters, continental shelf or exclusive economic zone offshore ofN igeria having a water depth in excess of 200 meters ; "deep rights" means petroleum rights vested in the Govemment after relinquishment under section 88 (5) (b) of this Act ; "Department of Petroleum Resources" means the Depa1tment of Petroleum Resources of the Federal Ministry of Petroleum Resources ; "des;gnated facilities" means petroleum crude oil and natural gas transportation pipelines, bulk storage tank farms, refineries, and gas processing plants in midstream petroleum operations and petrochemical plants; "distribution pipeline" means a low-pressure pipe tine for the purpose of conveying natural gas or petroleum products to customers; Petroleum Industry Act, 2021 2021 No. 6 A329 "disposal" and "disposed of' in relation to chargeable oil ow11ed by a company engaged in petroleum operations, means- (a) delivery or export, without sale, of chargeable oil to an affiliate or other company, and ( b) chargeable oil delivered or transferred, without sale, to facilities used for midstream operations ; "·domestic base price" means the price determined under the Third Schedule to this Act ; "domestic crude oil supply obligation" means the obligations of an upstream crude oil producer to dedicate a specific volume of crude oil towards the domestic refineries as stipulated in section 109 of this Act; "domestic gas aggregator" means a licensee of a domestic gas aggregation licence; «domestic gas aggregation licence" meaus a licence granted under section I 53 of this Act ; '"domestic gas demand requirement" means an aggregate of the vol Jme of natural gas required to meet the natural gas demand for strategic sectors within the domestic economy for a specified period under section 173 of this Act; "'domestic gas delivery obligation" means the obligations of a le~see producing natural gas to dedicate and deliver to a transfer point a spedfic volume of natural gas towards meeting the domestic gas demand requirement, as stipulated in section 110 ofthis Act ; "downstream gas operations" means all activities entered into for the purpose of, distribution and supply of natural gas to retail customers, city gate reception tenninals for natural gas, stations for the distribution, marketing and retailing of natural gas ; '·downstream petroleum products operations" means all activities entered into for the purpose of distribution and supply of petroleum products to retail customers. tank fanns for distribution of petroleum products. and stations for the distribution, marketing and retailing ofpetroleum products ; '"downstream petroleum operations" means downstream gas operations and downstream petroleum products operations ; "effective date" means the date on which this Act comes into force; '"exploration well" means a well that in the opinion of the Commission is aimed at discovering petroleum in a separate field in which petrol,:!um has not been previously discovered; "domestjc base price" means the price determined under subsection 167 (l) of this Act; A 330 2021 No. 6 Petroleum Industry Act, 2021 "Federal lligh Court" means the FeJeral High Cou1i established by section 249 of the Coi1stitution of the Federal Republic ofNigeria, 1999; "Federation Accounr means the Federation Account stated in section 162 of the Constitution of the Federal Republic ofNigeria, 1999; "field development plan" means a field development plan as specified under section 79 (2) of this Act ; "field'' includes an area consisting of a single reservoir or multiple reservoirs al I grouped on, or related to, the same geological structural feature, stratigraphic condition, a combination of both and refers to the underground productive formations or their vertical projection to the surface; ·'fiscal gas price" means the price established in paragraph 8 (3) of the Seventh Schedule to this Act; "fiscal oil price" means the price established in paragraphs 8 ( 1) and (2) of the Seventh Schedule to this Act; "force majeure" inc !udes delays or inab iIity to perform any ob Iigati ons under this Act (other than a payment obligation), due to any event beyond the reasonable control of a person, and the event may be, but is not limited to, any act, event, happening, or occurrence due to natural causes, and acts or perils of navigation, fire, hostilities, war (declared or undeclared), blockade, labour disturbances, strikes, riots, insurrection, civil commotion, quarantine restrictions, epidemics, storms, floods, earthquakes, accidents, blowouts or lightning and an event of force majeure shall not include changes in the laws ofNigeria or any political subdivision thereof or any acts or orders of Government, any minister, ministry, department, subdivision, agency, authority, counc i1, committee, or other constituent e Iemen t thereof, or any corporation owned or controlled by any of the foregoing, where operations are delayed, curtailed or prevented by force majeure, then the time for carrying out the obligation and duties thereby affected, and rights and obligations hereunder, shall be extended for a period equal to the period thus involved provided that such period shall not exceed three years in total after which each party can terminate the respective licence or lease ; "frontier acreages" means any or all acreages in an area on land in Nigeria defined as a frontier in a regulation issued by the Commission ; "frontier basin" means basins where hydrocarbon exploration activities have not been carried out or previous commercial discovery oil and gas have not been made or an area that is u ndeve Ioped and inc [udes Anarn bra, Dahomey, Sida, Sokoto, Chad and Benue trough or as may be declared by the Commission through a regulation ; "frontier exploration fund'' means the fund established in section 9 (3) of this Act; Petroleum Indushy Act, 2021 2021 No, 6 A 331 "fu11d manager" means a person or company appointed by the Board ,;f Trustees to manage and invest the reserve fond established under the provisions of Chapter 3 of this Act for the benefit of the trust; "gas distribution licence" means al icence for the distribution ofnatural gas through a low-pressure pipeline system in a specific geographical area under section 148 of this Act; "gas distribution network" means a set of interconnected distribution pipelines for natural gas; "gas distributor" means the holder of a gas distribution licence ; "gas processing licence" means a licence granted under section 129 of this Act; "gas retailer" means a holder of a retail gas supply licence under section 146 of this Act; '·gas transportcttion network" means a set of interconnected gas transportation pipelines in a particular geographical area; "gas transportation network operator licence" means a licence to operate a gas transportation network under sect ion 13 8 of this Act ; "gas transportation network operator" means the holder of a gas transportation network operator Iicence ; "gas tramportation pipeline" means a pipeline for the transportation of natural gas ; "gas transportation pipeline licence" means a licence for a gas transportation pipeline granted under section 13 5 of this Act ; ·'good international petroleum indusfly practices" means those uses and practices that are, at the time in question, generally accepted in the international petroleum industry as being good, safe, economical, environmentally sound and efficient in petroleum operations and should reflect standards of service and technology that are either state-of-the-art or otherwise appi·opriate to the operations in question and should be applied using standards in all matters that are no less rigorous than those in use by petroleum companies in global operations ; "Governmel1t" means the Federal Government of Nigeria; "host commimities" means communities situated in or appurtenant to the area of operation ofa settlor, and any other community as a settler may determine under Chapter 3 of this Act; ''host communities development plan" has the meaning givei1 to it in section 252 of this Act; '·host communities development trust" has the meaning given to it in section 23 5 ( I) of this Act ; A 332 2021 No. 6. Pe1roleu111 Indush:v Ac!, 2021 '"'host co,mmmities developmel11 trustfunt.f' means the fund established under section 240 ( 1) of this Act : "host communities needs assessment" has the meaning given to it in section 251 ( 1) of this Act ; '-'large-scale gas utilisation industries" means-- (a) large-scale industries that use natl1ral gas as a feedstock such as gas-to-liquid plants, petrochemical industries and fertiliser plants; and (b) mini-LNG plants, power plants and such other industries as defined in regulations ; "lease" means a petroleum mining lease; "lessee" means a holder of a lease ; "UBOR" means London lnterbank Offered Rate ; "licence" means a licence issued by the Commission or Authority in respect of any applicable upstream, midstream or downstream petroleum operations; "licensee" means a holder of a licence ; ·'licensing round guidelines" means guidelines that are established by the Commission to govern the process of issuing Iicences or leases during a licensing round ; ~liquefied 1wtural gas" or "LNG" means natural gas in liquid form through condensation at close to atmospheric pressure and at a temperature ofapproximately minus 162 degrees celsius; "liquefied petroleum gas" or "LPG"' means mixtures of propane and butane and small concentrations of other gases which are gaseous under room temperature and pressure but .are liquefied by applying pressure; ·'local distribution zone" means an authorised area as specified in regulations, within which one gas distributor may operate ; ''loss" means a loss ascertained in like manner as an adjusted profit ; "management committee" means the committee set up under section 24 7 of this Act ; ''marginal field" means a field or discovery which has been declared a marginal field prior to l st January 202 I ; "marketable natural gas" means natura I gas whi eh meets specifications detennined by the Authority for distribution to wholesale customers and retail customers- (a) for use as a domestic, commercial and industrial fuel ; and (b) as feedstock or industrial raw material ; Petroleum Industry Act, 202 I 2021 No. 6 A333 ·'marketable natural gas delivery point" rneans a point where marketable natura 1 gas is made n vailab le to customers, at the exit of a gas processing plant or gas conditioning plant or at a measurement point, or such other location immediately downstream of a facility in which such natural gas has been produced, processed, conditioned or treated in order to produce marketable natural gas; "measurement point" means- (a) a pointdetennined in the field development plan under section 79 (2) of this Act, where petroleum is being measured and its value is deteimined for royalty purposes, (b) where the point has not been determined, a point dfrectly downstream of the flow station in the petroleum mining lease, and (c) where measurements take place outside the petroleum mi11ing lease, a deemed measurement point in the petroleum mining lease based on a calculation procedure approved by the Commission adjusting from the points where petroleum is being measured ; '·midstream and downstream gas il'ifrastructure fund" means the fund established under section 52 of this Act; "midstream and dmmsfream gas operations" means activities downstream ofthe measurement points of petroleum mining leases, whether or not related to the petroleum mining lease, with respect to the construction and operation of natural gas transport or transmission pipelines, including the related compressor stations, construction and operations of facilities to compress, transport and deliver compressed natllral gas (CNG); construction and operations of gas processing facilities and central processing facilities. producing ethane, propane, butane and natural gas liquids and marketable natural gas; construction and operation of underground or above ground faci Iities for the storage of natural gas, ethane extraction plants, construction and operation of gas to liquids (GTL) plants, construction and operation of lubricant, petrochemical and fertiliser plants, construction and operation of LNG p \ants, and related LNG terrnina ls as well as storage and transport of LNG, acquisition. operation or chartering of LNG tankers for coastal and marine transportation, purchase and sale, trading, bartering, aggregating and marketing of nat ura I gas transported by pipelines, compressed natural gas, LNG, methane, ethane, propane, butane, natural gas liquids and liquids from GTL piants with respect to wholesale customers and gas distributors and related administration and overhead ; ;·111idstream petroleum liquids operations'' means activities downstream of the measurement points of petroleum mining leases, whether or not related to the petroleum mining lease, with respect to the construction and operation of facilities for upgrading of heavy oil, construction and operation of lubricant, A 334 2021 No. 6 Petroleum Industry Act, 2021 petrochemical and fertiliser plants, construction and operation of petroleum liquids transport pipe lines, inc Judi ng the related pumping stations; acquisition, operation, leasing, rental or chartering of barges, coastal or ocean-going tankers, railcars and trucks for the transport of petroleum liquids, construction, leasing and operation of tank farms and other storage facilities and export terminals for petroleum liquids, construction and operation of refineries, purchase and sa!e, trading, bai1ering, marketing of petroleum liquids and related administration and overhead; "midstream and do11 111stream petroleum operations" means midstream petroleum liquids operations and mid stream and downstream gas operations ; "Minister ofPetroleum" or "Minister" means the Minister of Petroleum Resources or any person designated by the President as having respons ibi Ii ty for overseeing the Petroleum Industry ; "Ministry of Environment" means the Federal Ministry in charge of environmental matters; "Min;stry of Finance" means the Federal Ministry in charge of finance matters ; "Ministry of Finance Incorporated" means the corporation sole established by the Ministry of Finance Incorporated Act, Cap. MIS, Laws of the Federation ofNigeria, 2004; ''MMBtu" means millions of British thermal units; "model contract" means a contract under section 85 of this Act ; "model lease" means a standard petroleum mining lease with terms and conditions adopted for a specific licensing round and may contain contractual provisions in a model contract attached to or incorporated in the model lease ; ';model licence" means a standard petroleum prospecting licence with tenns and conditions adopted for a specific licensing round and may contain contractual provisions in a model contract attached to or incorporated in the model licence ; "National Data Repository" means national petroleum data bank as defined in the National Data Repository Regulation, 2007 and its amendment; "National Salaries, Incomes and Wages Commission" means the National Salaries, Incomes and Wages Commission established by section I of the National Salaries, Incomes and Wages Commission Act, Cap. N72, Laws of the Federation of Nigeria, 2004; "national strategic stock" means the reserve of petroleum products kept in ce1tai n storage depots and foe iIities by the Government or on behalf of the Government to provide for emergency; Petroleum Industry Act. 2021 2021 No. 6 A335 "natural gas" means all gaseous hydrocarbons, and all substances contained in it and as exist in natural state in strata, associated or not with crude oil, and are in a gaseous state upon production from a reservoir and excludes condensates ; «natural gas liquids" or "NGL" means hydrocarbons liquefied at the surface in separators, field facilities or in gas processing plants, and include ethane, propane, butanes, pentanes, and natural gasoline; "Nigeria" means the te1Titory ofthe Federal Republic ofNigeria inclusive of its land borders, territorial waters, continental shelf and exclusive economic zone; "Nigerian National Petroleum Corporation" or '"NNPC" means the Nigerian National Petroleum Corporation established by section l of the Nigerian National Petroleum Corporation Act, Cap. Nl23, Laws of the Federation of Nigeria, 2004; "'NNPC Li11iited" means Nigerian National Petroleum Company Limited, a company to be incorporated under the Companies and Allied Matters Act under this Act; «non-associated gas" means natural gas that is found in a reservoir which does not contain significant quantities of crude oil; "oil mining lease•• means an oil mining lease granted under the Petroleum Act, Cap. P l 0, Laws of the Federation ofNigeria, 2004 prior to the effective date of tb is Act ; «oil prospecting licence,. means an oil prospecting licence granted under the Petroleum Act, Cap. PIO, Laws of the Federation of Nigeria, 2004 prior to the effective date of this Act; "onshore" means any land areas above the high-water mark, other than frontier acreages ; "open access" means. subject to section 116, 11011-d iscriminatory access to a midstream facility, transportation pipeline or transportation network for all users or shippers under conditions where the licensee does not have any preferential rights to these facilities, under conditions stipulated in the licence and in the case of a transportation network or pipe Iine ; "paying quantities" means in relation to the level of production of a field, the production of volumes of oil or gas or both, of which the value exceeds the royalty and operating costs on a regular basis, based on levels of production that are aimed at achieving maximum economic recovery of the petroleum ; "parce 1" means a parcc I under section 69 (4) of this Act ; "permit" means an official certificate of perm i ss i011 to undertake an activity issued by the Commission or Authority; A 336 2021 No. 6 Petroleum Indu:,try Act, 2021 ''person" means any individual, company or other juristic person; "petroleum" means hydrocarbons and associated substances as exist in its natural state in strata, and includes crude oil, natural gas, condensate and mixtures of any of them, but does not inc Iude bitun1en and coal ; "Petroleum Equalisation Fund" means the fund established under the Petroleum Equalisation Fund (Management Board, etc.) Act, Cap. PI I, Laws of the Federation ofNigeria, 2004; "petroleum exploration lkence" means a licence under section 71 of thisAct; "petroleum exploration operations" means any geological, geophysical, geochemical and other surveys and any interpretation of data relating thereto, and the drilling of such shot holes, core holes and stratigraphic tests, related to the exploration for crude oil and natural gas, but not includi11g exploration wells or appraisal wells; "petroleum industry" means the industries involved in upstream, midstream and downstream petroleum operations in Nigeria ; "Petroleum Inspectorate" means the Petroleum Inspectorate established under section l Oof the Nigerian National Petroleum Corporation Act, Cap. N 123, Laws of the Federation of Nigeria, 2004 ; "petroleum liquids" means crude oil, condensates, liquid petroleum products and natural gas liquids; "petroleum liquids transportation pipeline licence" means a licence for a petroleum liquids transpo1tation pipe I ine granted uuder section 190 of this Act; "petroleum liquids transportation network operator" means the holder ofa petroleum liquids transportation network operator licence; "petroleum liquids transportation ne!ll'ork operator licence'' means a licence to operate a petroleum liquids transportation network under section 193 of this Act ; "petroleum liquids transportation pipeline" means a pipeline transporting petroleum liquids; "petroleum mining lease" means a lease under section 81 of this Act; "petroleum operations" means upstream, midstream and downstream petroleum operations ; "Petroleum Pricing and Product Regulatory Agency" means the Petroleum Pricing and Product Regulatory Agency established under section 1 of the Petroleum Pricing and Product Regulatory Agency (E :;tab llshment) Act, Cap, P43, Laws of the Federation of Nigeria, 2004; Petroleum Industry Act, 2021 2021 No. 6 A337 "petroleum product distribution licence" means a licence for the distribution of petroleum products under section 20 I of this Act ; "petroleum product distributor" means the holder of a petroleum product distribution licence ; "'petroleum product retailer" means a holder of a petroleum product retail licence ; "petroleum product retail licence" means a permit to retail petroleum products to final customers under section 203 of this Act ; "petroleum products" means materials derived from crude oil and natural gas processing such as ethane, propane, butanes, pentanes, liquefied petroleum gas, natural gas liquids, asphalts, gasoline, diesel, gas oil,jet fuel, transportation fuels, fuel oils for heating and electricity generation and such other derivatives ; "petroleum prospecting licence'" means a licence under section 72 of this Act; "pipeline" means all parts of any tubular infrastructure through which petroleum is conveyed, including pipes, valves, pumping and compressor stations and other equipment appurtenant to pipes ; "President' means the President of the Federal Republic of Nigeria; "producer client" means a lessee who is a client of the domestic gas aggregator making use of the escrow account mechanism; "production sharing contract" means any agreement for the exploration, development and production of petroleum on terms under which the financial risk-bearing party shall recover costs and receives a share of the profits based on a share of production as established in the contract from the applicable area; "public service obligations" means specific obligations imposed by the Authority on licensees in relation to security of supply, social service, economic development, environmental protection or the use ofindigenous materials; "qualifiedperson" means a person designated by regulation in respect of the issuance of a Jicence, lease or permitto any person with respect to upstream, midstream and downstream petroleum operations; "raw gas" means natttral gas prior to any conditioning for the removal of H2S, CO2 and other impurities and prior to processing to remove natural gas liquids and which does not have the qualities of marketable natural gas; l i. "regulation" means rule or order having force of law issued by the Minister, Minister of Finance, the Commission or Authority in accordance with this Act; A 338 2021 No. 6 Petroleum Industry Act, 2021 "rent" means the annual charge made in respect of a licence or lease granted under this Act ; "renegotiated production sharing contract" means a production sharing contract for which court cases or arbitration cases were outstanding, and was or is being renegotiated after the effective date of this Act with the ohjective of settling the ou tstand ing court cases or arbitration cases ; «reservefimd" is the fund under section 244 (b) of this Act; "'resen,oir" means a subsurface rock formation containing an individual and separate natural accumulation of producible petroleum characterised by a single natural pressure system; "'retail gas supply licence" means a licence granted under section 146 of this Act; "retentfon area" means the area approved by the Commission for a significant gas discovery or significant crude oii discovery under this Act ; ·"retention period" means the period not exceeding 10 years granted by the Commission to the holder of a petroleum licence to retain rights to develop an area over which a significant gas discove1y or significant crude oil discovery has been made; .;royalties" means the royalties specified in the Seventh Sched u Ie to th i5 Act; ••sett/or" is a holder of an interest in a petroleum prospecting licence or petroleum mining lease whose area of operations is located in or appurtenant to any community or communities ; "shallow water" means any area within the territorial waters, continental shelf or exclusive economic zone offshore of Nigeria up to and including a water depth of 200 meters ; "signature bonus" means a payment made to Government with respect to the grant of a petroleum prospecting licence or petroleum mining lease; "Significant crude oil discovery" means a discovery of crude oil tha, is substantial in terms of reserves and is potentially comm ere ia I, but cannot be declared commercial for one or both of the fol Iov.: ing rcasons- (a} no pipeline or facilities are available i11 existing systems when: commercial conditions indicate that the best option for dc'-"-;;·lopment i!; based on the ftiture expansion of such systems or the use L'f such systems when capacity wil! become available in the future; or (b) where the crude oii discovery ,vould on.ly be commercial when ioi ntly developed with other existing disccv2rits or potential foture discoveries ; Petroleum Industry Act, 2021 2021 No. 6 A339 "significant gas discove,y" means a discovery of natural gas that is substantial in terms of reserves and is potentially commercial, but cannot be declared commercial for one or more of the following reasons~ (a) no markets for natural gas within Nigeria; (b) export markets need to be identified and developed; (c) no pipeline, processing or liquefaction capacity is available in existing systems where commercial conditions indicate that the best option for development is based on the future expansion of such systems or the use of such systems when capacity will become available in the future; or (d) where the natural gas discovery would only be commercial v.'hen jointly developed with other existing natural gas discoveries or potential future natural gas discoveries ; "special investigation unit" means a unit estab! ished either under section 27 or 50 of this Act; ''standw·d cubic foot" means, in relation to natural gas, the quantity of dry ideal natural gas at a temperature of 60 degrees Fahrenheit and a pressure of 14.696 pounds per square inch absolute contained in a volume of one cubic foot; "supplie1'" means the holder of a wholesale gas supply licence, a wholesale petroleum liquids supply licence or a retail gas supply licence; '·tarijf' means the price charged for the provision of a pa11icutar service, or group of services, with respect to midstream and downstream petroleum operations; ··terrain'' means the area of any petroleum exploration licence, petroleum prospe..::ting licence or petroleum mining lease; '·termfna!" means a terrn ina ! for petroleum liquids, pu rnp ing or booster sta t,;on, 01· or her insta lIm ion or structure associated with a tenn inal, including its storage fac iI ities. other thai1 a termina I situated with in "a port or any approaches thereto" within the meaning of the Nigerian Ports Authority Act. Cap. Nl26, Laws of the Federation of Nigeria, 2004; ''third party access" means the legal requirement for owners of certain infrmtructun:: facilities to grant access to thos·~ facilities to parties other than themselves or their ov,:n cu:.torncrs, for uncommitted capacity, including cc:11pctitors in the provision of the relevant services, rn1 tern1s stipulated in this _.1.,;;: tor 1·egu la: in11s ; ''transpurtationfuels" means fuels used for transport on land, 011 water a11d in the air, such as gasoline, aviation gasoiini;!. diesel, jet fuel, marine bui,iz,.~r foe!, u·...;o, Cl'lG m1ci other fossil foel has~d products, as well as 11yd rogen, h io-d ie se !, bio-j i;! t fue I, ~.tilano l an cl o ti 1er fue !s used for transport ,:-,utpos::.~ : A 340 2021 No. 6 Petroleum Industry Act, 2021 "transportation network" means a system of interconnected transportation pipe lines and other foe iIit ies required to transport natural gas or petroleum liquids; "transportation pipeline" means a pipe Ii ne used for the bulk conveyance of petroleum liquids and for natural gas under high~pressure; "transportation pipe/foe owner" means the holder of a gas transportation pipeline licence or a petroleum liquids transportation pipeline licence; "upstream petroleum operations" means the exploration for, appraisal of, development of and winning or obtaining of petroleum in Nigeria by or on behalf of a company on its own account for commercial purposes, petroleum exploration operations, the drilling of exploration, appraisal and development wells, all activities upstream of the measurement points, related to the winning of petroleum through wells or mining from petroleum reservoirs, drilling, fracking, completing, treatment and operation of we!ls producing petroleum, construction and operation of gathering lines and manifolds for crude oil, natural gas and water, construction and operation of high and [ow pressure separators, constrnction and operation of facilities to treat crude oil and natural gas, flaring of natural gas, compression and reinjection of natural gas in reservoirs, construction and operation offacilities for the production of electricity or heat from natural gas or other fuels as energy source for the winning of petroleum, injection or re-injection of water into the reservoirs, construction and operation of pipelines and other facilities for the discharge of water, construction and operation of fixed or floating platforms or other vessels required for the winning of petroleum, construction and operation of fixed or floating storage fac iIi ties of crude oi I in the licence area, transportation to and from the licence area of personnel, goods and equipment, metering of we 11 stream flu ids, metering of petro!eu m at the measurement points prior to transportation, sale and marketing of crude oil, natural gas or condensates or any of them at the measurement points and such other activities which by regulation are considered upstream petroleum operations, and related administration and overhead, provided, however, that where field foci tities or fixed or floating platforms or vessels provide for fu !ly integrated upstream and mid stream petro teum operations, the Commission may consider the entire operations as upstream petroleum operations under section 8 (d) of this Act; "[)TM' means the Universa I Transverse Mercator, a conformal projection which uses a two-dimensional Ca11esian coordinate system to give locations on the surface of the earth ; Petroleum Industry Act, 2021 2021 No. 6 A341 ;'wholesale customer" means a class of customers designated in regulations with respect to~ (a) natural gas, the right to contract for and purchase a supply of wholesale gas, with a capability to connect individually and economically to a transportation pipeline or transportation network and shall include gas distributors, and (b) crude oil or petroleum products, it shall be a customer of a yearly volume defined by regulation and shall include petroleum product distributors; "wholesale gas" means natural gas sold by a supplier to wholesale customers; ''l1'holesale gas supplier'' means the holder of a wholesale gas supply licence; '·ll'holesale gas supply licence" means a I ice nee for the supply to wholesale customers of natural gas under section 142 of this Act; "-wholesale petroleum liquid'i supplier" means a holder of a wholesale petroleum liquids supply licence; "wholesale petroleum liquids supply licence" means a licence for the supply to wholesale customers of petroleum liquids under section 197 of this Act.

319. This Act may be cited as the Petroleum Industry Act, 2021. Citation. A 342 2021 No. 6 Petroleum industry AcJ, 202. l SCHEDULES FIRST SCHEDULE Section 3 (3) RIGHTS OF PRE-EMPTION I. The licensee or lessee shall use his best endeavours to increase so far as possible with his existing facilities, the supply of petroleum or petroleum products, or both, for the Federal Government to the extent required by the Minister.

2. The licensee or lessee shall, with all reasonable expedition and so as to avoid demurrage on the vessels conveying the same, use his best endeavours to deliver all petroleum or petroleum products purchases by the Minister under the right of pre-emption in such quantities, and at such places of shipment or storage in Nigeria, as may be determined by the Minister.

3. Where a vessel employed to carry petroleum or petroleum products under paragraph 2 is detained on demuri·age at the port ofloading, the licensee or lessee shall pay the amount due for demmrage according to the terms.of the charter-party or the rates ofloading previously agreed to by the licensee or lessee, unless the de lay is due to ea uses bey and the contro I of the licensee or lessee.

4. Any dispute which may arise as to whether a delay is due to causes beyond the control of the licensee or lessee shall be settled by agreement between the Minister and the licensee or lessee or, in default of agreement, by arbitration.

5. The price to be paid for petroleum or petroleum products taken by the Minister in exercise of the right of pre-emption shall be- (a) the reasonable value at the point of delivery, less discount to be agreed by both pa11ies; or (b) where no such agreement has been entered into prior to the exercise of the right of pre-empt ion, a fair pi' ice at the port of delivery to be sett Ied by agreement between the Minister and the licensee or lessee 01; in default of agreement, by arbitration.

6. To assist in arriving at a fair price for the purposes of paragraph 5 (b), the licensee or lessee shall, if the Minister so requires- (a) furnish for the confidential information of the Minister partku!ars of quantities, descriptions and prices of petrnleum or petroleum products so Id to other customers and of charters or contracts entered tnto for their carriage ; and Petroleum Industry Act. 2021 2021 No. 6 A343 (b) exhibit original or authenticated copies of the relevant contracts or charter-parties,. 7, Any arbitration under the First Schedule shall take place after the petroleum or petroleum products have been delivered. A 344 2021 No. 6 Petroleum Industry Act, 2021

SECOND SCHEDULE Sections 54 (7) a11d 65 (1) PRINCIPLES OF NEGOTIATING lNCORPGRATED JOINT VENTURES General Provisions 1. ( 1) An INC may be created for an existing joint operating agreement and each INC shall be formed under the Companies and Allied Matters Act, and NNPC Limited shall enter into negotiations with the other parties to such existingj oint operating agreements with a view to, among other things- (a) agreeing and executing a shareholders' agreement in respect of the applicable INC ; ( b) agreeing the provisions of the memorandum and articles of association of the applicable IJVC; and (c) incorporating the applicable IJVC. (2) Prior to the incorporation of each INC, the parties to each applicable joint operating agreement shall continue to carry out their obligations under such joint operating agreement in the ordinary course of business. (3) Each INC shall be owned by the parties to the applicable existing joint operating agreement in the same proportion as their existing participating interests set forth in such joint operating agreement, or in such other proportion as the parties thereto shall mutually agree. (4) Upon and following the incorporation of an INC- (a) it can carry out upstream, midstream and downstream petroleum operations subject to the appropriate fiscal regime as speci fled in this Act, provided, however, that where the parties wish to enter into more than one stream of operations, the parties shall incorporate separate companies under section 302 (3) and (4); (b) it shall be deemed to be the sole licensee or lessee (as applicable) of each petroleum prospecting licence or petroleum mining lease held jointly under the applicable existingjoint operating agreement immediately prior to its incorporation ; (c) it shall at all times be the operator of petroleum operations under each petroleum prospe_cting licence and petroleum mining lease that it holds; (d) it may contract for specific petroleum services but may not enter into any contract or group of contracts which would have the effect oftransferring, directly or indirectly, any ofthe functions as operator except with the approval ofthe Commission, in the case ofupstream petroleum operations, or Authority, in the case of midstream and downstream petroleum operations ; Petroleum Industry Act, 2021 2021 No. 6 A345 (e) it shall by publication on its website make public reasonable details relating to its incorporation and constitutional documents ; and (( ) it may render any services related to its operations (other than financial and insurance services), to any other IJVC, NNPC Limited, or any other third party under such conditions as it may deem necessary or desirable. Special Provisions Relating to Incorporated Joint Venture Companies 2.-(1) No IJVC shall be subject to the provisions of the Fiscal Responsibility Act and the Public Procurement Act. (2) Once incorporated, the following provisions shall apply to each INC- (a) prior to any sale of shares in an IJVC by any shareholder, the other shareholders (including NNPC Limited) shall have the right of first refusal on such transaction at fair market value and appropriate ministerial consent; and (b) each IJVC shall have its head office and main operational offices in Nigeria. Organisation of Incorporated Joint Venture Companies 3.-(1) Each IJVC shall have a Board of directors to be appointed by the shareholders of the INC. (2) The Board of directors of each INC shall be made up of persons who- (a) have distinguished themselves in their various capacities; and (b) ate able to exercise independence and objectivity with respect to the affairs of the INC. (3) The powers of the Board of directors of each IJVC shall be established in the articles of association of such IJVC, provided that, the Board of directors of such IJVC shall have the power to approve the annual work program and budget of such IJVC and any revisions thereof. {4) The Board of directors of each INC may create committees and subcommittees. (5) Dec is ions of the Board of directors of each IJVC shall be guided by commercial and technical considerations that represe11t good international petroleum industry practices. A 346 2021 No. 6 Petroleum Industry Act, 2021 Special provisions relating to the shares of h1corporated .,Joint Venture Companies 4,--(1) The share_capital of each IJVC shall initially consist only of ordinary shares. (2) The shares held directly or indirectly by NNPC Limited in each IJVC shall at all times during the life of each IJVC remain 11on~transferab!e either by way of sale, assignment, mortgage or pledge to any other entity except as approved by the Government and such sale or transfer shall be at fair market value after an open, transparent and competitive bidding process in which only companies who qualify under section 95 ( 11) of this Act can participate, Special provisions relating to rents, royalties, taxes and other levies payable by an IJVC 5.--(I) Each IJVC shall be subject to this Act on payment of rents, royalties and taxes. (2) The initial capitalisation of each IJVC and the transactions required to create such IJVC shall not create a11y additional tax liabilities for any of the holders of shares in the IJVC, provided that, all assets, interests and liabilities previously held jointly pursuant to the applicable joint operating agreement are transferred to the IJVC at their net book value, Special right of shareholders in an h1corporated Joint Venture Company to purchase petroleum and any petroleum derivatives 6.---(1) Each direct holder of shares in an IJVC shall have the right to purchase from the IJVC- (a) at open market prices, a percentage of the crude oil, natural gas and condensates produced by such INC equal to its shareholding interest in such IJVC ; and (b) at open market prices, a percentage of the petroleum products produced by such IJVC equal to its percentage ownership interest in the IJVC. (2) Where the direct holders of shares in an IJVC do not purchase all crude oil, natural gas, condensates and petroleum products that they are entitled to under subsection (I), such IJVC may sell the remaining balance to any person at open market prices on ann's length terms. (3) Any income received by an DVC as a result ofthe export of petroleum may be held in bank accounts abroad and may be used by such IJVC to pay its obligations outside Nigeria, subject to any obligation of such IJVC under this Act and any other app Iicable enactments. Petroleum Industry Act, 2021 2021 No. 6 A347 ( 4) The transfer overseas of any fund by an UVC shall be subject to the regulations and policies of the Central Bank ofNigeria. Pro-rata Dividend Distribution 7 .-( l) Each IJVC shall pay dividends and other distributions pro rata among the number ofissued shares held directly by its shareholders. (2) Each dividend payment or other distribution shall be subject to any withholding tax applicable under the Companies Income Tax Act. Dividend Policy 8. The Board of directors of each IJVC shall establish and from time to time amend the dividend distribution policy of such IJVC and such dividend distribution policy shall be premised on the prudent and commercially reasonable management of the finances and operations of the IJVC. Special Provisions Relating to Financing of Operations 9.-(1) Each IJVC shall finance any exploration for new prospects, peveloprnent of new fields. or any other investments in accordance with the applicable approved annual work program and budget for such incorporated joint venture from the cash flows of the IJVC and any borrowings by such IJVC, in each case as approved by its Board of directors. (2) Where the cash flow, together with any borrowings, of an IJVC is insufficient to finance the work program in respect of any exploration for new prospects, development of new fields, or any other investments approved by the Board of directors of such INC, the shareholders of such INC shall consult as to the manner in which further financing can be raised. (3) With respect to subparagraph (2), the shareholders may consider among others------- (a) permitting any of the shareholders to contribute equity in excha11ge for the issuance of ordinary shares ; and (b) the creation of prefen-ed shares for any shareholder that wishes to make a financial contribution to the incorporated joint venture. A 348 2021 No. 6 Petroleum Industry Act, 2021

THIRD SCHEDULE Sections 167 (I) and 318 1. The domestic base price at the marketable gas delivery point under section 167 ( I) shal I be dete1111 ined based on regu !ations incorporating among such other matters as may apply pursuant to the subsequent paragraph, the following principles----- be (a) the price must of a level to bring forward sufficient natural gas supplies for the domestic market on a voluntary basis by the upstream petroleum industry ; (b) unless required to satisfy conditions under sub-subparagraph (a), the price shall not be higher than the average of similar natural gas prices in major emerging countries that are significant producers of natural gas based on countries determined by the Authority ; (c) subject to the limitations under sub-subparagraph (b) the price shal I be adjusted upward on a yearly basis in order to account for inflation on a yearly amount or percentage basis ; and (d) the Authority shall determine the domestic base price based on the regulations within three months following the effective date and modify this price where required by the circumstances in the domestic market pursuant to regulations. Allocation and Pricing of the Domestic Delive1y Obli¥ation 2. Pursuant to section 110 oft his Act, the Commission shall establish the criteria for allocation of domestic gas delivery obligations including the following~ (a) all available gas at low cost of supply shall be eligible for designation to the domestic gas market ~ (i) the ranking of gas available for the domestic gas market shall be determined by a tier system based on the cost of supply, (ii) the pricing of gas for the domestic market shall be based on the lowest cost of supply of gas available in the three-tier classification of supply sources for the domestic market, and ( iii) the Commission shall detennine the pricing mechanism to be utilised for gas supply to the domestic market under the domestic deli ve1y obligation and such pricing may include gas on gas, oil based price mechanism, equivalent energy mechanism and bilateral pricing mechanism or any other such mechanism that reflects the prevailing market condition; (b) all associated gas from producing fields shall be eligible for designation as tier one gas for the domestic gas market ; Petroleum IndushJ' Act, 2021 2021 No. 6 A349 (c) all gas cap gas from depleted oil fields shall be considered as tier two gas and designated for the domestic gas market ; and (d) available gas in non-associated gas fields onshore and shallow offshore shall be considered as tier three to be evaluated for eligibility of supply to the domestic gas market based on its cost of supply. A 350 2021 No. 6 Petroleum Industry Act, 2021

FOURTH SCHEDULE Section 168 (1) and (4) Pricing formula for gas price for the gas based Industries The gas price for the gas based industries shall be determined by the fo I!owing pricing fonnula- CP = NRP * (] + EPFJ <=EPP Where - CP is the applicable price in US $/MMBtu, EPP is the domestic base price under section 168 (3), NRP is the National Reference Price which is US$1/MMBtu EPF is the End Product Factor which is described by the following formula ( CMPP - PRP)/PRP CMPP is the Average Current Month End Produ~t Price in US $/MT PRP = Product Reference Price in US $/MT i.e. dollar per metric tonne wb ich varies depending on the industry NRP (US S!mmbtu} End Producl Net oftransporl Tariff PRP (USS/MT) USS/Kcf Ammonia l.00 250 Urea 1.00 250 Methanol 1.00 250 Polypropylene 1.00 250 (LDPPFiHDPPE) Low Sulphur Diesel (GTL) 1.00 325 The Authority may by regulation change the formulas or the va !ues for NRP, CMPP and PRP and introduce other values for one or more gas based industries where the circumstai1ces so justify. Petroleum Industry Act, 2021 2021 No. 6 A 351

FIFTH SCHEDULE Sections263 (1) (d), 266 (1) (a), 270,271 (2)(b) and(c), 277 (l) (c) 280 (I) (b) and 302 (iO) (a) CAPITAL ALLOWANCES Interpretation l. For the purpose of this Schedule- (a) "concession" includes a petroleum exploration licence, petroleum prospecting licence, petroleum mining lease, any right, title or interest in or to petroleum in the ground and any option of acquiring any such right, title or interest ; (b) "lease" includes an agreement for a lease where the term to be covered by the lease has begun, any tenancy and any agreement for the letting or hiring out of an asset, but does not include a mortgage, and all cognate expressions including "LEASEHOLD INTEREST" shall be construed accordingly and where,- (i) with the consent of the lessor, a lessee of any asset remains in possession after the termination of the lease without a new lease being granted, that lease shall be deemed for the purpose of this Schedule to continue so long as the lessee remains in possession, and (ii) on the termination of a lease of any asset, a new lease of that asset is granted to the lessee, the provisions of this Schedule shall have effect as if the second lease were a continuation of the first lease ~ (c) "qualifying expenditure" means, subject to the express provisions of this Schedule, expenditure incurred for the purpose of hydrocarbon tax in an accounting period, which is capital expenditure, referred to ag...- (i) "qualifying plant expenditure" incurred on plant, machinery and fixtures directly for upstream petroleum operations applicable to crude oil for petroleum mining leases or petroleum prospecting licence, (ii) "qualifying pipeline and storage expenditure" including floating production systems incurred directly or gathering pipelines for upstream petroleum operations applicable to crude oil for petroleum mining leases or petroleum prospecting licences, (iii) "qualifying building expenditwe" other than expenditure, which is included in sub-subparagraph (c) (i), (ii) or (iv) of this "h1terpretalion", incurred directly on the construction of buildings, structures or works of a permanent nature for upstream petroleum operations appl icabJe to crude o ii for petroleum mining leases or petroleum prospecting licences, or A 352 2021 No. 6 Petroleum Industry Act, 202 l (iv) «qualifying drilling expendilure", tangible and intangible, other l than expenditure which is included in sub-subparagraph ( c) (i) or ( ii) of this "Interpretation", incurred directly in connection with upstream petroleum operations for petroleum mining leases or petroleum prospecting licence, in view of searching for -or discovering and testing petroleum deposits, or winning access, or the construction ofany works or buildings which are likely to be ofl ittle or no value when the upstream petroleum operations for which they were co11structed cease to be carried on, provided that, for the purposes of these definitions, qualifying expenditure shall not include any sum which may be deducted under section 263 of this Act and have benefited from capital allowances prior to the acquisition of the asset by another entity; (.d) for the purpose of interpretation of qualifying expenditure, where expenditure is incurred by a company before its first accounting period and such expenditure would have fallen to be treated as qualifying expenditure, ascertained without the qualification contained in the foregoing proviso ifit had been incun-ed by the company on the first day of its first accounting period and that expenditure is incurred in respect of an asset, owned by the company then such expenditure shall be deemed to be qualifying expenditure incurred by it on that day, or which has been disposed of by the company before the beginning of its first accounting period, then any loss suffered by the company on the disposal of such asset shall not be allowed on commencement of accounting period and any profit realised by the cam pany on such disposal shall be liable to capital gains tax in the same period accordingly. Provisions relating to pre-production expenditure 2. For the purpose of this Schedule, where- (a) expenditure has been incurred before its first accounting period and the expenditure would have been treated as a qualifying expenditure in any of the cl asses of qualifying expenditures stated in su bparagraph (I) (c) (;)-(i11), then it shall be so classified and capital allowances claimed accordingly; and (b) Where the expenditure before the first accomtting date should have been treated as allowable deduction in an accounting period, it shall he so a!ioweci but fully amortised over 8 period offive years with ,,...,..~ ·;, a I% retention value. Owner 011d meaning r!l relevum interest 3 .---( l) For the purpose of tb is Scheci ulc, where Rn asset consists of a building, structure or ,vorks, the owner shal! b,:: taken to be the owner oftlle relevant interest in such bui !ding, strncturt" or worl\: Petroleum Industry Act, 2021 2021 No. 6 A353 (2) Subject to this paragraph, the expression "the relevant interest" means, in re iation to any ex pendi ture incmTed on the construction of a bu i!ding, structure or works, the interest in such building, structure or works to which the company which incurred the expenditure was entitled when it incmTed the expenditure. (3) Where a company incurs qua! ifying building expenditure or qualifying dri IIi ng expenditure on the construction of a bu iId ing, structure or works, the company is entitled to two or more interests therein, and one of those interests is an interest which is reversionary on al I the others, that interest shall be the relevant interest for the purpose of this Schedule. ( 4) Where the owner of the relevant interest does not have statutory title to the asset, that is, it is not the Iicensee or lessee to the asset, the qua! ifying capital expenditure and the capital allowances accruing therefrom, for the purposes of this Schedule, shall be to the benefit of the holder oft he licence or lease. Sale of Buildings 4. Where capital expenditure has been incurred on the constmction of a building, structure or works and the relevant interest is sold, the company which buys that interest shall be deemed, for the purpose of this Schedule, to have incurred, on the date when the purchase price became payable, capital expenditure on the construction equal to the price pa id by it for such interest or to the origirial cost of construction, whichever is the less and the capital expenditure shall not be eligible for capital allowance ded11ction under the hydrocarbon tax, provided that where such relevant interest is sold before the building, structure or works has been used, the foregoing provisions of this paragraph shall have effect with respect to sale and the original cost of construction shall be taken to be the amount of the purchase price on such sale. Annual Allowance 5.-(1) Subject to this Schedule, where in any accounting period, a company owning any asset has incurred in respect of the asset qualifying expenditure who Ily, reasonably, exclusively and necessarily for the purpose of upstream petroleum operations applicable to crude oil carried on by it, there shall be due to that company as from the accounting period in which the expenditure was incurred, an allowance "an annual allowance" at the appropriate rate percent specified in the table to this Schedule. (2) Notwithstanding the provisions of subparagraph ( 1) of this paragraph, there shall be retained in the books, in respect of each asset 1% ofthe initial cost of the asset which may only be written off in accordance with subparagraph (3). A 354 2021 No. 6 Petroleum Industry Act, 2021 (3) Any asset or part ofit in respect of which capital allowances have been granted, may only be disposed of on the authority of a certificate of disposal issued by the Commission or any person authorised by it. 6. Subject to paragraph 18, an annual allowance in respect of qualifying expenditure incurred in respect of any asset shall only be due to a company for any accounting period if at the end of the accounting period it was the owner of that asset and the asset was in use for the purpose of the upstream petroleum operations applicable to crude oil carried on by it. Balancing allowances 7. Subject to this Schedule, where in a11y accounting period of a company, the company owning any asset in respect of which it has incurred qua! ifyiug expenditure wholly and exclusively for the purposes of upstream petroleum operations applicable to crude oil carried on by it, disposes of that asset, an allowance "a balancing allowance" shall be due to that company for that accounting period of the excess of the residue of that expenditure, at the date such asset is disposed of, over the value of that asset at that date, provided that a balancing allowance shall only be due in respect of such asset if immediately prior to its disposal it was in use by such company for the purposes of the upstream petroleum operations applicable to crude oil for which such qualifying expenditure was incurred. Balancing charges 8. Subject to this Schedule, where in any accounting period of a company, the company owning any asset in respect of which it has incurred qualifying expenditure wholly and exclusively for the purposes of upstream petroleum operations applicable to crude oil carried on by it, disposes of that asset, the excess '"a balancing charge" of the value of that asset, at the date of its disposal, over the residue of that expenditure at that date shall, for the purpose of section 262 (I) (a) of this Act, be treated as income of the company of that accounting period, provided that a balancing charge in respect of such asset shall only be so treated if immediately prior to the d isposa! of that asset it was in use by such company for the purposes of the upstream petroleum operations app! bible to crude oil for which the qualifying expenditure was incurred and shall not exceed the total of a nn ua! a llowanccs due under this Schedule, in respect of such asset. Residue 9. The residue of a qualifying expenditure, in F!Spect of any asset, at any date, shal [betaken to be the total qualifying expenditure incurred on or before that date, by the owner, in respect of that asset, less the total of any annual allowances due to such owner, in respect of that asset, before that date. Petroleum Industry Act, 202 I 2021 No. 6 A355 Meaning of "di:,.posed of" l 0. Subject to any express provision to the contrary, for the purpose of this Schedule-- (a) a bui !ding, strncture or works of a permanent nature is disposed of if any of the following events occur- (i) the relevant interest is sold, (ii) that interest, being an interest depending on the duration of a concession, comes to an end at the end of that concession, (iii) that interest, being a Leasehold interest, comes to an end and the possession of the building, structure or works of a pennanent nature reverts to the holder of the reversionary interest, or (iv) the building, structure or works of a permanent nature are demolished, destroyed or, without being demo Iished or destroyed, cease al together to be used for the purpose of upstream petroleum operations 2pplicable to crude oil carried on by the owner; (b) plant, machinery or fixtures are disposed of if they are sold, discarded or cease altogether to be used for the purposes of upstream petrofeum operations applicable to crude oil carried on by the owner ; or ( c) assets in respect of which qualifying drilling expenditure is incurred are disposed of if they are sold or if they cease to be used for the purpose of the upstream petroleum operations applicable to crude oil of the company incurring the expenditure either on the company ceasing to carry on the operations or on such company receiving insurance or compensation money therefrom. Value of an asset or imerest in a petroleum prospecting licence or petro/eun1 mining lease 11.-( l) The value of an asset or interest in a petroleum prospecting licence or petroleum mining lease at the date of its disposal shall be the net proceeds of the sale or of the relevant interest, or, where it was disposed of without being soId. the amount which, in the opinion of the sen ice, the asset or the relevant i11leres.t; as the case may be, -..votdd have fetched if sold in the open market at that date, less the amount of any expenses which the own er might reasonably be expected to incur if the asset were so sold. (2) For the purpose of this paragraph. where an asset is disposed of in the circumstances that insurance or compensation money are received by the ovvner, the asset or the relevant interest, as the case may be, sball be treated as having been sold and as though th~ net proceeds of the insurance or compensation money ,vere the net proceeds of the sule. A 356 2021 No. 6 Petroleum Industry Act, 2021 Apportionment 12 .--{ l) Any reference in this Schedule to the d isposa \, sale or purchase of any asset or interest inc Iudes a reference to the <l isposa 1, sale or purchase of that asset, as the case maybe, together with any associated asset, whether or not qualifying expenditure has been incurred on such associated asset, and, where an asset is disposed of, sold, or pure based together with another asset, so much of the value of the assets as, on a just apportionment, is properly attributable to the first mentioned asset shall, for the purposes of this Schedule, be deemed to be the value of, or the price paid for that asset, as the case may be. (2) For the purpose of this subparagraph, al I the assets or interest which are purchased or disposed of in pursuance of one bargain shall be deemed to be purchased or disposed of together, notwithstanding that separate prices are or purport to be agreed for each of those assets or that there are or purport to be separate purchases or disposals of those assets. (3) The provisions of su bparagraph ( 1) shal I apply, with modifications, to the sale or purchase of the relevant interest in any asset together with any other asset or relevant interest in that other asset provided that the provisions for apportionment in subparagraphs ( 1) and (2) shall not apply in the sale or disposal of concessions or interest in a part of the asset. Part of an asset 13. Any reference in this Schedule to any asset shall be construed whenever necessary as inc Iud ing a reference to a part of any asset, including an undivided part of that asset in the case of joint interests and when so construed, any necessary apportionment shall be made in a manner, which in the opinion of the Service, is just and reasonable. Exclusion of certain expenditure 14. Subject to the express provisions of this Schedule, where any company has incurred expenditure which is allowed to be deducted under any provision, other than a provision of this Schedule, such expenditure shall not be treated as qualifying expenditure. Asset used or expenditure incurred partly for the purpose of petroleum operations 15.-(1) The following provisions of this paragraph shall apply where either or both of the fol lowing conditions apply with respect to any asset the- ( a) owner of the asset has incurred in respect of the asset a qualifying expenditure partly for the purpose of upstream petroleum operations applicable to crude oil carried on by him and pm1ly for other purposes; or Petroleum Indusfly Act, 2021 2021 No. 6 A357 (b) asset in respect of which the owner has incurred qualifying expenditure is used partly for the purpose of u pstremn petroleum operations applicable to crude o iI carried on by such owner and pa11ly for other purposes. (2) Any nih,wances which would be due or any balancing charges which would be treatt!d as income if both expenditure were incurred wholly and ex.elusively for the purpose of the upstream petroleum operations applicable to crude oil and if the asset were used wholly and exc lusivety for the purpose of such operations, shall be computed in accordance with the provisions of this Schedule. (3) So much of the allowances and charges computed in accordance with subparagraph (2) shall be due or shall be so treated, as the case may be, as in the opinion of the Service is just and reasonable having regard to all circumstances and to the provisions of this Schedule. Disposal without change of ownership 16 .---( 1) Where an asset in respect of which qua Iifyi ng expenditure has been incurred by the owner has been disposed of in circumstances that the owner rem a ins the owner, then, for the purpose of determining whether and, if so, in what amount, any annual or balancing allowance or balancing charge shal I be made to or on sue h owner in respect of his use of that asset after the date of the disposal- (a) qualifying expenditure incurred by the owner in respect of the asset prior to the date of the disposal shall be left out of account ; and (b) the owner shall be deemed to have bought such asset immediately after the disposal for a price equal to the residue of the qualifying expenditure at the date of the disposal, increased by the amount of any balancing charge or decreased by the amount of any balancing allowance made as a result of the disposal. (2) Capital allowances shall be for the computation of hydrocarbon tax and not for cost recovery purposes in production sharing contracts, which shall have their own provisions under the model contract. A 358 2021 No. 6 Petroleum Industry Act, 2021 Capital allowance rates 17.-( 1) Qualifying expenditure shaii be subject to the rates below- Qualifying Capital Expenditure 1st 2nd 3trl 4th 5th Yeal' Year Year Year Year Qualifying Plant Expenditure 20% 20% 20% 20% 19% Qualifying Pipeline Expenditure 20% 20% 20% 20% 19% Qualifying Building Expenditure 20% 20% 20% 20% 19% Qualifying Drilling Expenditure 20% 20% 20% 20% 19% (2) Exploration expenditure and the firsttwo appraisal wells expenditure in the same field are to be treated as deductible costs 100% in the year incurred, while for additional exploration expenditures and appraisal expenditures in the same field relating to pre-production peri-od are to be amortised and deducted on commencement of accounting period at an annual alJowance of 20% in the first to fourth year and 19% in the fifth year with a I% retention value. 18.-( l) For the purpose of this Schedule, an asset shall be deemed to be in use during a period of temporary disuse. (2) For the purpose of paragraphs .5 and 6 of this Schedule- (a) an asset in respect ofwhich qualifying expenditure has been incurred by the owner for the purpose of petroleum operations carried on by him shall be deemed to be in use between the dates mentioned, where the Service determines that the first use to which the asset will be put by that owner will be for such operations ; and (b) the said date shall be the date on which such expenditure was incurred and the date on which the asset is in fact first put to use- Provided that where any allowance has been given in consequence of subparagraph (2) and the first use to which such asset is put is not for the purpose of such operations, or it is not put to use within five years from the date the expenditure was incurred, capital allowances already claimed on such assets shall be withdrawn and the amount so <;[aimed shall be assessed to tax. Petroleum Industry Act, 2021 2021 No. 6 A359

SIXTH SCHEDULE Sections 264 ( q ), 266 ( 1) ( b) and (2 ). 277 (1) (d) and 280 {l) (c) PRODUCTIOK ALLOWANCES AND COST PRICE RATIO LIMIT Production Allowance 1.----( l) There shall be a production allowance for crude oil production by leases which are converted oil mining leases based on a conversion contract and their renewals, which shall be the lower of US $2.50 per barrel and 20% of the fiscal oil price. (2) There shall be a production allowance per field for crude oil production by a company for leases granted after the commencement of this Act and determined as follows-- (a) for onshore areas - the lower of US $8.00 per barrel and 20% of the fiscal oil price per barrel up to a cumulative maximum production of 50 million barrels from commencement of production and the lower of US $4.00 per barrel and 20% of the fiscal oil price thereafter; (b) for shallow water areas - the lower of US $8.00 per barrel and 20% of the fiscal oil price, up to a cumulative maximum production of 100 million barrels from commencement of production and the lower of US $4.00 per barrel and 20% of the fiscal oil price thereafter; and (c) for deep offshore areas and frontier basins - the lower of US $8.00 per barrel and 20% of the fiscal oil price, up to a cumulative maximum production of SOO million barrels from the commencement of production and the lower of US $4.00 per barrel and 20% ofthe fiscal oil price thereafter. (3) The detailed procedures for determining the production allowances shall be established in regulations. ( 4) Any allowances for crude oil shall also apply to condensates and liquid natural gas liquids under section 260 (l) (a) of this Act. Cost Price Ratio (CPR) Limit 2.--{l) All costs prescribed under section 263 and under the Fifth Schedule to this Act, excluding those related to section 263 (I) (a), ( b) and (h), in an accounting period the sum of which is eligible for deduction under the hydrocarbon tax shall be subject to a cost price ratio limit of 65% of gross revenues determined at the measurement points. A 360 2021 No. 6 Petroleum Industry Act, 202 l (2) Where, as a result of subparagrnph (1), any excess costs incurred not allowed for deduction for that year of assessment, then- ( a) the costs may be allowed for deduction for the purposes of ascertaining the profits of the company for subsequent years of assessment provided that the total costs to be deducted shall not exceed the actual costs incurred ; (b) the total costs to be allowed as deduction in those subsequent years shall be such an amount that if added to the sum of the total costs to be al lowed as deduction under su bparagraph ( 1) shall not exceed the specified cost price ratio limit of 65% ; and (c) where under paragraph 2 (2) (b), any cost exceed the cost price ratio Iimit upon the termination of upstream petroleum operations related to crude oil, such costs shall not be deductible for purpose of calculation of the hydrocarbon tax. Petroleum Industry Act, 2021 2021 No. 6 A361

SEVENTH SCHEDULE Section 268 (3), 303 (!), 306 and 318 PETROLEUM FEES, RENTS AND ROYALTY PART I-FEES Fees payable for licences and leases 1. Commission shall through regulations publish the rates or fees payable in respect of the following- (a) application for a petroleum exploration licence; (b) application for a renewal of a petroleum mining lease; (c) application to assign an interest or sublet a petroleum exploration licence, petroleum prospecting licence or petroleum mining lease; (d) application to terminate or effect a partial or full surrender of a petroleum exploration licence, petroleum prospecting licence or petroleum mining lease; (e) application for perm it to operate a drilling rig ; (f) application for grant of field development plan approval and the related petroleum mining lease; (g) application for the approval of the drilling of a well; (h) permit to expo1t samples for analysis; (i) application to withdraw any of the applications in sub-subparagraph (aHh); and (i) application for other fees as may be deemed necessary by the Commission. PART II-RENTS AND BONUSES Rents for Licences 2. Every petroleum prospecting licence and petroleum mining lease shall be subject to rent as prescribed in the relevant regulation and the rent shall be an amount per hectare per year. Payment of fees before grant of licence or lease 3.-(1) A petroleum prospecting licence and petroleum mining lease shall not be granted without prior payment of the applicable fees, applicable signature bonus, and the rent applicable to the first year. (2) A petroleum mining lease shal I not be renewed without prior payments of the renewal bonus L\11 der this Act. A 362 2021 No, 6 Petroleum lndustJy Act, 202 l Penalty for default in payment of rent 4. Failure to pay the rent as prescribed in the relevant regulation shall result in a penalty as prescribed in the said regulation or any other enactment, provided that where no penalty is prescribed in the said regulation, there shall be an application of an interest rate of UBOR or any other successor rate p !us I 0% to the outstanding payment in US Do! Jars and where the payment of the applicable rent is not made within three months, revocation of such licence or lease under this Act shall be initiated. Verification and payment account 5.-Any rents imposed under this section shall be paid into the Federation Account and verified by the Commission. PART III-ROYALTIES All Petroleum production subject to Royalties 6. All production of petroleutn, including production tests, shall be subject to royalties on a non-discriminatory basis with respect to all licensee and lessees and shall be paid into the Federation Account and verified by the Commission and for royalty purposes condensates shall be treated as crude oil and natural gas liquids shall be treated as natural gas. Measurement Point for the determination of production volumes 7.-(1) Royalties shall be determined on a monthly basis at tbe measurement points and where there is production from production tests under a petroleum prospecting licence, the Commission shall determine measurement point for such production and where there is no measurement equipment at a possible measureinent point in the field at the commencement of this Act, or where logistical conditions make the installation of measurement equipment at a possible measurement point impractical or uneconomic in the opinion of the Commission, the Commission may approve procedures for determining the chargeable volumes at a deemed measurement point in the field based on measurements at the point of sale, export terminal or other point downstream of such deemed measurement point under the regulations or guidelines and the measurement of crude oil, condensates and natural gas liquids shal! be in barrels and of natural gas in standard cubic feet and where so justified, the Commission may approve repmtingofproduction of natural gas liquids in metric tons. (2) The chargeable volume for royalty purpose sball be calculated by ascertaining the quantity of natural gas., crude oi I, conden sates and natural gas liquids produced in the re tevant month from each fie Id operated by the licensee or lessee under a regu !ation or guide Iine. Petroleum Industry Act, 2021 2021 No. 6 A363 (3) Where natural gas liquids are extracted in a gas processing plant downstream of the measurement point, the rich natural gas volumes, still including the natura I gas Hqui ds, shall be n1easured at the measurement point and be the bas is for royalty ca\c ulati ons and the value of such rich natural gas shall be the value of the marketable natural gasp! us the natural gas liquids at the exit of the gas processing plant, less the gas processing costs and less the transport cost between the measurement point and the gas processing plant based on tariffs established by the Authority. (4) Natural gas liquids and liquid petroleum gases shall have the same royalty rates as the natural gas from which these products are derived. ( 5) The chargeable vo !ume sbal ! be measured at standard tern peratures and pressures as defined by regulation or guidelines and production shall not include any- (a) volumes burned, flared or vented with the approval of the Commission; (b) volumes re-injected by the lessee into reservoirs for the purpose of improving or enha11dng production of crnde oil or for conservation of natural gas; {c) volumes used in the upstream petroleum operations for the production of electricity or heat for exclusive use in the operations of the lessee; and (d) water or sediments. (6) The obligation to install the necessaty measurement equipment shall be that of the licensee or lessee and shall be certified by the Commission and the measurement procedures and equipment for measurement at and prior to the measurement point sha! l be established in regu !ations or guidelines. Determination of price for royalty 8.-( l) The royalties applicable to crude oil and condensates shall be based on the fiscal oil price determined for the field at the measurement points under applicable regulations or guidelines, and this price shall be determined by the Commission on the basis of information supplied by the lessees and from non-confidential independent publications, making such adjustments for quality and transport costs as appropriate to prices of comparable crude oils and condensates sold in the international market, as determined by the Commission, for which appropriate information is available and with the objective to approximate as reasonably as possible the average fair market value of the month of the crude oil and condensates for such month for such field. A 364 2021 No. 6 Petroleum Indztslly Act, 2021 (2) The fiscal oil price for each field shall consider any quality differentials related to international crude oils and condensates and shall be an export parity price taking into consideration the deduction of transportation costs within Nigeria from the measurement points as determined by the Authority to export terminals. (3) Royalties applicable to natural gas shall be based on the fiscal gas price determined for the field at the measurement point under applicable regulations or guide Iines and this price sha II be detenn ined by the Commission, taking into consideration submissions by the lessees, and shal I be based on the netback value at the measurement point based on the composition of the natural gas in terms of marketable natural gas, ethane, propane, butane, pentanes and other natural gas liquids as may be derived by processing of the natural gas and the net back procedure shal ! take into consideration the type of natural gas markets to which the natural gas from the field is being sold, such as export markets, domestic wholesale markets, markets based on the aggregate gas price or other natural gas pricing framework as permitted under this Act and the procedure shall take into consideration conditioning costs, processing costs and transportation costs with in Nigeria as determined by the Authority from the measurement point to the market, where the sales poirt is downstream oftbe measurement point, and where natural gas liquids are produced in the field, the total gross value of the liquids shall be taken into account in the determination of the total gross value of the natural gas for the purpose of the fiscal gas price. Royalties in kind or cash 9 .-( 1) The Commission shal I rcceiv e the royalty in kind or in cash at its discretion and the payment shall be subject to notice periods and procedures as provided for in regulations or guidelines and where royalties are paid i11 cash the payments shall be based on the fiscal oil price and fiscal gas price. (2) The licensee or lessee shall pay royalties to the Commission within a period that is not more than one month after the end of every month during which the petroleum is produced or as the Commission may direct, with respect to-------- (a) crude oil and condensates the royalties shall be based on the royalties based on production under paragraph I O plus the royalties based on price under paragraph 11 ; and (b) natural gas and natural gas liquids the royalties shall be based on the royalties based on production under paragraph 10. I Petroleum Industry Act, 2021 2021 No. 6 A365 (3) Royalties shall be paid in US Dollars, hO\vever, for production delivered for local refining, royalties may be wholly or partly paid in Naira at Central Bank of Nigeria applicable exchange rate for the valuation of crude oil delivered. (4) The Commission shall inform the Minister responsible for Finance of instances where the Commission intends to levy royalties in kind rather than in cash. Royalties based on production I 0.-(I) For the purpose of paragraph 9, royalties based on production shall be calculated on a field basis. (2) The royalty shall be at a rate per centum of the chargeable volume of the crude oil and condensates produced from the field area in the relevant month on terrain basis as follows- (o) onshore areas 15%; ( b) shallow water ( up to 200m water depth) 12.5% ; (c) deep offshore (greater than 200m water depth) 7.5%; and (d) frontier basins 7.5%. (3) For deep offshore fields with a production during a month of not more than 50,000 bopd, the royalty rate shall be 5% and the share of the production above 50,000 bopd shall be at the royalty rate specified in subparagraph (2). (4) Royalties for onshore fields and shallow water fields, including marginal fields, with crude oil and condensate production not more than I 0,000 bopd during a month shall be at a rate per centum of the chargeable volume of the crude oil and condensates produced from the field area per production day during a month on tranched basis as follows- (a) for the first 5,000 bopd 5%; and (b) for the next 5,000 bopd, for the share of production over 5000 bopd 7.5%: Provided that fields with crude oil and condensate production more than 10,000 bopd during a month, the share of the production over I 0,000 bopd per month shall be at the royalty rates specified under subparagraph (2), (5) 'With respect to paragraphs (3) and (4), where a single field covers two or more petroleum mining leases, the royalty shall be determined based on the total production from the field. A 366 2021 No. 6 Petroleum Industry Act, 2021 (6) Royalty based on production for natural gas and natural gas liquids shall be at a rate of 5% of the chargeable volume and royalty rate for natural gas produced and uti !ised in-country shal I be 2.5% of the chargeable volume. (7) Where a field is Iocated partia Ily in onshore and in sha !low water or partially in shallow water and deep offshore areas, the weighted average royalty shall be calculated as per regulations. Royalty by price 11.-(1) There shall be payable, in addition to the royalty set out in paragraph l Ofor onshore, shallow water and deep offshore a royalty by price with respect to crude oil and condensates at the rates set out below- (a) below US $50 per barrel -0%, (b) at US $100 per barrel - 5%, (c) above US $150 per barrel- I0%, and (d) between US $50 and US $ l 00 per barrel and between US $ l 00 and US $150 per barrel the royalty by prke shall be determined based on linear interpolation, as an example, if in 2020 the price is US $75 per barre!, the royalty by price shall be 2.5%, and the price levels mentioned in sub-subparagraphs (a), (b) (c) and (d) shall apply to the year 2020, and at the beginning of 2021 and of each succeeding calendar year these price levels shall be increased by 2% relative to the values of the previous year. (2) There shall be no royalty by price for frontier acreages. (3) Royalty derived from "royalty by price" shall be for the credit of Nigerian Sovereign Investment Authority. 12. Penalty for non-payment and outstanding payments of royalties and enforcement of payment where any royalty due and payable under this Act is not paid within two months after the month in which the royalty is due, then it qualifies to be a debt which shall attract- (a) a sum equal to 10% of the amount of the royalty payable wrich shall be added to the royalty ; ( b) in the case of foreign currency transactions, the outstanding payments due shall incur interest at the prevailing LIBOR or any other successor rate plus I 0% point basis; (c) in the case ofNaira transactions, the outstanding payments due shall incur interest at the prevailing NIBOR plus I 0% point basis; (d) NI 0,000,000 or US Dollar equivalent on the first day the failure to pay the royalty occurs ; and Petroleum lndus!ly Act, 2021 2021 No. 6 A 367 (e) N2,000,000 or US Dollar equivalent for each day in which the failure continues. Revocation, Seizure and Sistrain 13. Where any fee, rent or royalty due under this Act is unpaid within three months after the month when it becomes due, whether lega Ily demanded or not, the Commission may, in addition to any other remedy which may be available- (a) initiate revocation of such licence or lease under this Act; and (b) enter into any land, property or premises possessed or occupied by the licensee or lessee in connection with the licence or lease, and- (i) seize and distrain and sell as landlords may do for rents in arrears, any petroleum, petroleum products, engines, machinery, tools, implements or other effects belonging to the licensee or lessee which may be found in or upon the land, property or premises, and (ii) out of money arising from the sale of the distress, retain and pay off the arrears of the fee, rent or royalty and also the costs and expenses incidental to the distress and sale, rendering the surplus, if any, to the licensee or lessee. PART IV-SUPPLEMENTAL Production Sharing, Profit Sharing and Risk Service Contracts 14.-( l) Where the Commission decides to grant a petro \eum prospecting licence or petroleum mining lease under contractua I terms under section 85 of this Act, the Commission· shall prepare the related model contract, which stipulates the fiscal and other provisions related to fees, rents, royalties for such contract, to be attached to such licence or lease. (2) The model contract shall contain as a minimum, the provisions related to fees, rents, royalties, hydrocarbon tax and compa11 ies income tax sti pu \ated in this Act. (3) A model licence related to frontier acreages shall not contain contractual provisions under section 85 of this Act and shall only contai11 the minimum provisions related to fees, rents, royalties under paragraph I 0 and companies income tax stipulated in this Act and upon the 1·enewal of any petroleum mining teases, hydrocarbon tax and royalty based on price under paragraph 11 based on onshore conditions shall apply. ( 4) For new acreage any production sharing contract shall have a cost limit of70% based on total oil production, and where applicable condensates A 368 2021 No. 6 Petroleum lndust,y Act, 2021 and natural gas liquids derived from associated gas, measured at the measurement point, and the minimum profit oil scale to Government in a production sharing contract shal I be based on cumulative production per field as follows- (a) up to and including SO million barrels· 5%; (b) over 50 million barrels and up to and including I 00 million barrels - I 0% ; (c) over l 00 million barrels and up to and including 350 million barrels - I 5% ; (d) over 250 million barrels up to and including 750 million barrels - 25% ; (e) over 750 million barrels ad up to and including 1500 million barrels - 35% ; or (f) over 1500 million barrels-45%. (5) There may be production sharing for associated or non•associated natural gas, to which only the rents, royalties and companies income tax applies under this Act, capital and operating costs related to making associated natura I gas available at the measurement points can be recovered from cost oil. (6) The contractors shall be the licensees or lessees and shall thereby be entitled to the capital al!owances under the Fifth Schedule. (7) The profit oil for crude oil under conversion contracts or for new acreages shall be detennined as the total volume of crude oil, where applicable, condensates and natural gas liquids derived from associated gas, less the royalties and less the cost oil as defined in the model contract. (8) For production sharing purpose, the adjusted profit of a company for hydrocarbon tax shall be determined under section 263 (1) (b), which means that royalties and the value of profit oil delivered in kind or cash from all fields to the Federation Account shall be deductible for the purposes of determining the adjusted profits and the calculation shall be consolidated as per the two classes under section 267 and the capital allowances under the Fifth Schedule shall be applied. (9) For a production sharing contract subject to a conversion contract under this Act, the cost limit shall be 60%. Petroleum Industry Act, 202 l 2021 No. 6 A369

EIGHTH SCHEDULE Section 53 (3) Creation of the Ministry of Petroleum Incorporated l. The Corporation sole known as the Ministry of Petroleum Incorporated (the Corporation) is established and shall continue to be a Corporation sole under that title. 2. The Corporation may sue and be sued in its said name and shal I have perpetual succession and a corporate seal which may from time to time be broken, changed, altered and made anew as the Corporation deems fit, and, until a seal is provided under this section, a stamp bearing the inscription "Federal Ministry of Petrolemn" may be used as the corporate seal. 3. The Corporation may enter into contracts and may acquire, purchase, take, hold and enjoy movable and immovable property of every description, and may convey, assign, surrender and yield up, charge, mo11gage, demise, reassign, transfer or otherwise dispose of, or deal with, any movable or immovable property vested in the Corporation upon such terms as the Corporation deems fit. 4. (I )All deeds and other instruments requiring the seal of the Corporation shall be sealed, with the seal of the Corporation in the presence of the Permanent Secretary and signed by the Pe11nanent Secretary, and such signing shall be sufficient evidence that the said seal was duly and properly affixed and that the same is the lawful seal of the Corporation. (2)Any other document requiring the signature of the Corporation shall be signed by the Permanent Secretary. 5. The Minister may, by order, vest in any public officer or authority any property, movable or immovable, for the time being vested in the Corp oration and, upon the cam ing into operation of any sue h orde1; the property to which such order relates shal I, without any conveyance, assignment or transfer, vest in such officer or authority for the like title, estate or interest and on the like tenure and for the like purposes as the same was vested or held immediately before the coming into operation of the order. A 370 2021 No. 6 Petroleum Industry Act, 202 l I certify, in accordance with section 2 (I) of the Acts Authentication Act, Cap. A2, Laws of the Federation of Nigeria 2004, that this is a true copy of the Bill passed by both Houses of the National Assembly. OJO 0. A., fnia, fcia Clerk to the National Assembly 9th Day of August, 2021 EXPLANATORY MEMORANDUM Th is Act is to provide legal, governance, regulatory and fi seal framework for the Nigerian petroleum industry, and the development of host communities SCHEDULE TO PETROLEUM INDUSTRY BILL, 2021 (]) (2) (3) (4) (5) Short Title long Title <?/ Lhe Summary <l the Date Passed by Date Passed hy <![ the Bill Bill Contents <?f the Bill the Senate Lhe House of Repre.eniatives Petroleum An Act to provide legal This Bill provides legal 15th July, 2021. 16th July, 2021. Industry Bill, governance, regulatory and fiscal governance, regulatory and fiscal 2021. framework for the Nigerian framework for the Nigerian Petroleum Industry, the petroleum industry, and the development of host communties; developinent of host communties. and for related matters. I certify that this Bill has been carefully compared by me with the decision reached by the National Assembly and found by me to be true and correct decision of the Houses and is in accordance with the provisions of the Acts Authentication Act Cap. A2, Laws of the Federation of Nigeria, 2004. I Assmr Om 0. A., foia.fcia Clerk Lo the National A,\·semh!y 9th Day <if August. 2021. Mrn1AMMADU Bu11Arll, GCFR President of the Federal Republic (?f Nigeria 16th Day of Auxust, 2021.