Review of the Legal Provisions of the Oil and Gas Local Content Law

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Review of the Legal Provisions of the Oil and Gas Local Content Law

Introduction

The Oil and Gas Industry Content Development Act, 2010 (“the Oil and Gas Local Content Development Act”) was passed into Law in Nigeria to consolidate the Nigerian government long-term objective of increasing the capacity and the participation of Nigerians in the oil and gas industry.

As the Nigeria government earns a very considerable amount of its revenue from the oil and gas industry, a fuller appreciation of this legislation is highly recommended.

This paper will start with an executive summary of the high points of this law; with details provided subsequently.

Executive Summary

a. The Oil and Gas Local Content Development Act was passed into Law to provide for the development of an all-inclusive Nigerian Local Content in the oil and gas industry, which in turn will further maximise the benefits of the oil and gas industry to the Nigerian economy.

b. The provisions of the Oil and Gas Local Content Development Act have now accordingly superseded any similar provision(s) in the Nigerian Petroleum Act; or in any other enactment or law pertaining to the development and participation of Nigerians in the oil and gas industry.

c. Subject to such conditions as may be specified from time to time by the Minister of Petroleum Resources, Nigerian Independent Operators in the oil and gas industry, with proven capacity, are now to be given the first consideration in the award of oil blocks, oil field licences, oil lifting licences and in all projects for which a contract is to be awarded in the Nigerian oil and gas industry.

d. The Nigerian Oil and Gas Content Development and Monitoring Board (“the Content Monitoring Board”) is established, as Regulator, to among other things implement, supervise, coordinate, administer, monitor and manage the various provisions of the Oil and Gas Local Content Development Act, with the resulting Regulations that will be made by the Minister for Petroleum Resources, in furtherance of the provisions of this Law.

e. Any bid for any licence, permit or interest in the Nigerian oil and gas industry must be accompanied by a Nigerian Content Compliance Plan which the local content Regulator must review and issue a certificate of authorisation if the Content Plan complies with the provisions of the Oil and Gas Local Content Development Act.

f. All operators and promoters in the Nigerian oil and gas industry are required to give to Nigerians, especially those operating in the oil and gas producing communities, the first consideration when acquiring goods and services, employing personnel or training existing personnel. The operators are also required to compulsorily submit at regular intervals, an employment, training and succession plan to the Oil and Gas Local Content Development Regulator.

g. All operators and promoters in the Nigerian oil and gas industry are also required to engage the services of only financial institutions and professionals registered and licensed by Nigerian regulatory authorities and professional bodies.

h. Corporations in breach of the provisions of this Act are liable on conviction to a fine of 5% of the value of the contract, in addition to a possible cancellation of such a contract or contracts.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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