2020 PIB: Operators to welcome roaming explorers

[By Sopuruchi Onwuka]

Technology innovators seeking to work on bypassed opportunities in the Nigeria’s oil blocks would now tap into commercial opportunities provided in the emerging petroleum law which confers them with the right to operate in third operated lease areas.

Minister of State for Petroleum Resources, Timipre Sylva

The new version of the consolidated Petroleum Industry Bill (PIB) expected to emerge as an act of the National Assembly later in the year empowers licensed explorers to carry out exploration surveys that explore discovery prospects in all Nigerian sedimentary basins.

The Oracle Today reports that low work programmes in large portions of lease areas held by big multinational players have become subject of concern in the industry where reserves growth has stalled due to fiscal disputes.

The new independent exploration opportunities captured in Chapter 1, Part 2 of PIB 2020 are contained in sections 69-71 of the bill which provides for the provision of the National grid system, licences and leases.

Under the arrangement which also confers sweeping powers on the upstream regulatory commission which will come up to replace to the current Department of Petroleum Resources (DPR) as Nigeria’s petroleum lease administrator, definition of lease and license areas shall cease to be uniform and determined by the regulator.

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Section 70 of the bill provides that the emerging Act shall allow for granting of three separate leases and licences that include a provision for speculative and non-exclusive exploration license.

The licenses are the petroleum exploration licence, which may be granted to qualified applicants to explore petroleum on a speculative and non-exclusive basis; the petroleum prospecting licence, which may be granted to qualified applicants to carry out petroleum exploration operations on an exclusive basis; and the petroleum mining lease, which may be granted to qualified applicants to search for, win, work, carry away and dispose of crude oil, condensates and natural gas.

The petroleum exploration license, according to the proposed law, grants an invasive right into third party operated assets for the purposes of exploration survey.

Section 71 of the bill specifies that petroleum exploration licence granted by the commission confers non-exclusive right the holder who is authorised to carry out petroleum exploration operations within the area provided for in the licence within three years before possible renewal for another three subject to fulfilment of prescribed conditions.

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The license however does not confer the wild cat explorer with “any right to win, extract, work, store, carry away, transport, export or otherwise treat petroleum discovered in or under the licence area.”

Concerns however reside in the provision that the Petroleum Exploration Licence “may cover an area that includes Petroleum Prospecting Licence or Petroleum Mining Lease, provided that the holders of such licences or leases shall have no obligation to purchase the results of any survey conducted under the petroleum exploration licence.”

But the exploration license comes with a clear advantage of preferential right to bid for and win prospecting license in frontier basins where the wild cat search indicates lead.

“A petroleum exploration licence granted in respect of frontier acreages may include a provision permitting the Licensee to select, based on the result of his exploration work and be granted one or more petroleum prospecting licences prior to the termination of the Licence containing the fiscal provisions stipulated in Chapter Four of this Act,” according to the bill.

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Commerciality resides in the right of the explorer to sublet the result of the exploration data to a third party player at a fee even though the bill states that “the Commission shall have sole right and title over any acquired raw and interpreted data obtained by a licensee pursuant to a petroleum exploration licence.”

Thus the commission is entitles to ownership of data acquired at the cost of the explorer but compensates the investor with “a data use licence to a third party subject to a written authorisation by the Commission, which shall not be unreasonably withheld.”

The terms for the licenses simply allows the explorer acquire useful data for sale to third party and remit due taxes and sundry charges to the commission which “shall have sole right and title over all acquired and interpreted data from existing speculative survey agreements entered into with the Department of Petroleum Resources on behalf of the Government prior to the effective date.”

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