OIL AND GAS LAW II PREVIEW
OIL AND GAS LAW II.
OIL AND GAS PIPELINES (IMPORTANCE, DISADVANTAGES, LEGAL FRAMEWORK FOR INSTALLATION, OPERATION AND DISPOSAL OF OIL PIPELINES
PETROLEUM REFINERY AND PROCESSING PLANT. LEGAL REGIME FOR ESTABLISHMENT, OPERATION AND MANAGEMENT.
ADMINISTRATION OF PETROLEUM PROFIT AND PETROLEUM PROFIT TAX.
NIGERIAN LOCAL CONTENT AND TRANSFER OF PETROLEUM TECHNOLOGY. (IMPORTANCE, INHIBITING FACTORS, LEGISLATIVE AND REGULATORY FRAMEWORK AND REQUIREMENTS WITH PARTICULAR FOCUS ON THE NIGERIAN (OIL AND GAS INDUSTRY) CONTENT DEVELOPMENT ACT 2010 NCDA).
OIL AND GAS DISPUTES (AT THE INTERNATIONAL LEVEL, OIL COMPANY V FEDERAL GOVERNMENT, INDIVIDUALS V EXPLORATION COMPANIES, HOST COMMUNITIES V THE GOVERNMENT AND OIL COMPANIES, ETC) ARBITRATION, MEDIATION, LITIGATION, ETC.
OIL AND GAS POLLUTION. (FORMS, CAUSES, EFFECTS, DEFENCES, REGULATORY LAWS, ESTABLISHMENTS AND BODIES WITH PROVISIONS, ISSUES OF LOCUS STANDI, JURISDICTION, EVIDENCE, PRE-ACTION NOTICE, LIMITATION PERIOD, SELF HELP AND SABOTAGE, ETC.
EXPROPRIATION AND NATIONALIZATION. (LEGAL BASIS, REASONS, ADVANTAGES, DISADVANTAGES, HOW FOREIGN COMPANIES CAN PROTECT AGAINST EXPROPRIATION, LEGAL REQUIREMENT OF PROMPT AND ADEQUATE COMPENSATION, ETC. IN EXPROPRIATION AND NATIONALIZATION).
Oil in situ is worthless and needs to get to the final consumers. After oil is extracted, it needs to be transported to where it can be refined afterwhich it is transported to the market where it can be sold.
Oil can be transported through vessels, ships, tankers or pipelines.
Pipelines are becoming increasingly popular in the transportation of Oil as they can transport more at a faster and cheaper rate.
Section 11(2) of the Oil Pipelines Act Cap 07 LFN 2004. defines an oil pipeline as “a pipeline for the conveyance of mineral oils, natural gas and any of their derivatives or components”. This definition was adopted in Agip Oil Company Ltd V Kemmer.
The construction and operation of oil pipelines in Nigeria is regulated by laws which include; the Oil Pipelines Act, Oil and Gas Production Regulations 1995, Petroleum Act, Petroleum Production and Distribution (Anti-Sabotage) Act, Environmental Impact Assessment Act, and so on.
A person who desires to construct a pipeline must follow the laid down guidelines.
First:: He/she/it must obtain a Permit to Survey (Also referred to as a license to Survey) from the Petroleum Minister: As provided by Section 4 of the Oil Pipelines Act. To get this permit, an application is made to the Minister of Petroleum Resources (accompanied with prescribed particulars and requisite fees- See Section 31 OPA) for permission to survey the route through which the pipeline would pass. If the Minister is satisfied, he may grant the License/permit to survey. This permit (from the interpretation of Section 5 OPA), empowers the holder to enter and survey the specified route. He can take levels of sand, dig, cut trees and remove obstructions… in summary he can do acts which are necessary to make preparations for installation of the pipeline. Provided he gives at least 14 days prior notice (of intention to enter upon premises) to the owner or occupier of the affected premises-Section 6. Unconsented entrance may amount to trespass. Note also that entry into certain lands are restricted under Section 15. Except with prior consent of the Minister. The holder shall exercise due care and compensate the owner or occupier of a premises for damage done. (On compensation, see also Regulation 23 of the Petroleum (Drilling and Production) Regulations which provides for compensation for disruption of fishing rights. Also Section 11(5)).
Second:: He should conduct an Environmental Impact Assessment: to determine the effect which his activity (construction and operation of the pipeline) is going to have on the environment. He should submit his report to the minister who is to consider this in determining whether or not to grant the license. If the minister sees that it is gonna have an adverse effect on the environment, he can vary the route or refuse the application.
Third:: He must obtain a License to Construct (regarded as the Oil Pipeline License): Section 7 provides: “The holder of a permit to survey may make an application to the Minister…for the grant of an oil pipeline licence in respect of any oil pipeline the survey of the route for which has been completed by the applicant”. The application shall clearly state the route of pipeline and nature of fluid to be conveyed. Persons that would be affected by the construction of the pipeline may make an objection at the appointed time for the minister to consider-See Section 8(1) OPA.
After the requisite fees have been paid and the prescribed conditions complied with, the minister may grant the Oil Pipeline license. This license entitles the holder to construct, operate and maintain an oil pipeline strictly in accordance with the terms of the grant.
Where the minister rejects an application, he should notify the applicant in writing-Section 7(3).
Section 7(4) OPA provides: “No person other than the holder of a licence shall construction, maintain or operate an oil pipeline”. The construction or operation by an unlicensed person may ground imprisonment of up to 2 years or 1,000 or both… in addition to removal or disposal of the pipeline.
Upon the grant of this license, Section 17(5) provides that the holder must commence construction within the time specified. The holder of the license is under a duty not to assign, sublet or mortgage the right under the license without the previous consent of the minister-Section 17(4d) OPA.
The pipeline so constructed can be inspected by a public officer. Section 6 and 7 OGPRegulation provide that the holder (i.e. licensee) must have a written emergency plan in the event of system failure and accidental discharge from the pipeline.
The license lapses after 20 years and an application for renewal may be made.
COMMON USAGE: This refers to a situation where two or more parties share an existing pipeline which goes to the same destination. This is NOT prohibited. Provided the conditions for use shall be determined by the parties or by the minister.
USE BY THIRD PARTY: Section 18 of the Oil Pipelines Act provides: any person other than the owner of the pipeline who seeks a right to have conveyed by the pipeline on his behalf any of the things mentioned in subsection (2) of Section 11 of this Act which the pipeline is designed to convey should make an application to the Minister in the prescribed manner.
- By Lapse of Time: The license terminates once the time (20 years) has lapsed.
- By the Licensee: Section 17(3) OPA provides: The holder of a licence may at any time during the term of licence determine the licence in respect of all or any part of the land included therein by giving to the Minister not less than three months previous notice in writing to that effect.
- By breach of Terms, Conditions and requirements in the License: provided due notice has been given to him (Section 27) but he still fails to remedy the breach.
The termination does not exculpate the holder from his existing liabilities.
SABOTAGE: can be regarded as the deliberate destruction of property. Section 1 Petroleum Production and Distribution (Anti-Sabotage) Act provides; any person who; (a) wilfully does anything with intent to obstruct or prevent the production or distribution of petroleum products in any part of Nigeria… shall… be guilty of the offence of sabotage under this Act. Sabotage has occurred in Areku, ijegun, osisioma. Death sentence or 21 years is prescribed in Section 2 PPDASabotageAct.
DECOMMISSIONING AND DISPOSAL: the issue of decommissioning arises where a reservoir is depleted. i.e. where the well supplies oil to the pipeline has been exhausted. Decommissioning entails the removal and disposal of obsolete installations. May include plugging wells with cement to protect ground water communication and removal of equipment.
Regulation 35 and 45 of the Petroleum Drilling and Production Regulation, the Environmental Impact Assessment Act and the Oil Pipelines Act deal with onshore decommissioning. They mandate that:
- The written consent of the Director of Petroleum Resources must be sought.
- The well(s) should be securely plugged/sealed to prevent contamination of ground water.
- The environment and premises should be restored as far as possible to their original conditions.
- An environmental impact assessment report is needed to show the effect of the decommissioning on the environment.
For offshore decommissioning:
- The EGASPIN provides that all installations weighing less than 4,000 tons should be entirely removed from the seabed.
- Article 60 of the UNCLOS provides that due regard must be had to the protection of the environment.
Note also that upon the termination of the license, the holder would have to make arrangements for the disposal/removal of the pipeline (and ancillary installations) within three months from the termination of such license. He can transfer/sell the pipeline to the minister at an agreed price or at a price to be determined by arbitration. In disposing, he should make good any damage done to land as a result of the removal
 See Section 5 (2) of the Oil Pipeline Act
 Also Section 1 OGPRegulations.
 See Section 8 OPA Section 2 OGPRegulations 1995.
 See Section 11OPAct which provides; (1)A licence shall entitle the holder, his officers, agents, workmen servants with any necessary equipment or vehicles, subject to the provisions of Sections 14, 15 and 16 of this Act, to enter upon, take possession of or use a strip of land of a width not exceeding two hundred feet or of such other width or widths as may be specified in the licence and upon the specified in the licence, and thereon there-over or there-under construct, maintain and operate an oil pipeline and ancillary installations.
 See Section 17 generally for the various terms and conditions.
 From the interpretation of Section 17(1) OPAct.
 In this context means to terminate.
 See Section 18(9) and 27 OPA.
 See for example Section 27(2) OPA.
 Dr Ayoade; Environmental Risk and Decommissioning of Offshore Oil Platforms.
 The United Nations Convention on the Laws of the Sea.
 Section 28.
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