Guidelines and Procedures for Obtaining Minister’s Consent to the Assignment of Interest in Oil and Gas Assets

In the wake of increasing acquisition, divestment and financing activities within the upstream segment of the Nigerian Oil and Gas industry, the Department of Petroleum Resources (“DPR”) on November 17, 2014 circulated the Guidelines and Procedures for Obtaining Minister’s Consent to the Assignment of Interests in Oil and Gas Assets (the “Guidelines”)  for the purposes of establishing  the procedure for obtaining the consent of the Minister of Petroleum Resources (the “Minister”) to any assignment of any right, power or interest in an Oil Prospecting Licence (“OPL”), Oil Mining Lease (“OML”), Marginal Field (“MF”) or Oil and Gas Pipeline Licence (“OGPL”) as required under  the Petroleum Act Cap P10 Laws of the Federation of Nigeria (“LFN”) 2004 (“PA”) and the Oil Pipelines Act Cap O7 LFN 2004 (“OPA”). 

This memo takes a critical look at the Guidelines, examining the lacunae which existed prior to the issuance of the Guidelines, highlighting the requirements and procedures of the Guidelines including in particular, changes to the existing regime, and analyzing the validity of the provisions of the Guidelines. 

The Legal Setting

Currently, pursuant to provisions of both the PA and the OPA, ministerial consent is required for certain categories of transactions involving oil and gas assets such as interests in OPLs, OMLs, MFs and OGPLs. Specifically, paragraph 14 of the First Schedule to the PA provides that: “Without the prior consent of the Minister, the holder of an oil prospecting licence or an oil mining lease shall not assign his licence or lease, or any right, power or interest therein or thereunder.”  

Similarly, section 17 (5)(d) of the OPA, lists conditions to be deemed included as part of the terms of every oil pipeline licence, including: “not to assign, sublet, mortgage or otherwise part with the licence or any right or Interest thereunder without the previous consent in writing of the Minister.”

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