NMDPRA Threatens Sanctions For Unlicensed Oil Operations In Free Trade Zones

The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), in a circular, has warned that oil and gas companies operating in free trade zones, export processing zones, and other designated areas without the requisite licences or permits would face sanctions in line with the Petroleum Industry Act (PIA) 2021.

The circular was addressed to managing directors and chief executives of oil and gas midstream and downstream companies, petrochemical and fertiliser firms, as well as oil import and export terminal operators.

The Agency reiterated that the authority remains the statutory regulator for technical, commercial, operational, and licensing matters in the sector under the PIA.

Its acting chief executive, Abiodun Adeniji, in the circular issued on Monday, stressed that no operator involved in midstream and downstream petroleum activities was exempt from its regulatory oversight, regardless of location.

According to the NMDPRA, its mandate covers all midstream and downstream petroleum operations across Nigeria, including the continental shelf, territorial waters, exclusive economic zone, industrial zones, free zones, and export processing zones.

The authority clarified that all petroleum operations involving refining, processing, storage, bulk transportation, pipelines, gas transportation networks, terminals, jetties, wholesale supply, importation, exportation, distribution, and sales of petroleum products and natural gas remain subject to its oversight.

It specifically warned that operators within free zones and similar designated areas cannot claim exemption from compliance with the PIA and regulations issued pursuant to the law.

The regulator further stressed that no individual or company is permitted to establish, construct or operate any midstream or downstream petroleum facility without obtaining the appropriate licence, permit or authorisation from the authority.

NMDPRA invoked Section 48(1) of the PIA, noting that any ministry, department or agency whose actions may affect midstream and downstream petroleum operations must first consult the authority before issuing regulations, guidelines, enforcement directives or taking actions relating to the sector.

The latest directive is expected to tighten regulatory scrutiny in Nigeria’s oil and gas sector, particularly in free trade and export processing zones where some operators have historically claimed varying regulatory exemptions.

“The operation of any midstream or downstream petroleum facility within a free zone, export processing zone or similar area does not exempt such a facility and its operations from compliance with the provisions of the PIA and regulations made thereunder.

“No person shall establish, construct, operate or undertake any midstream or downstream petroleum activity except with an appropriate licence, permit or authorisation granted by the Authority in accordance with the PIA,” the organisation maintained.

According to the circular, the authority reserves the right to review recommendations from such government institutions and communicate its decision, which must subsequently be complied with.

In addition, the regulator cited Section 309 of the PIA, which provides that where provisions of any other law conflict with the PIA, the provisions of the petroleum law would prevail.

“In view of the foregoing, any person engaging in midstream and downstream petroleum operations without an appropriate licence, permit or authorisation from the Authority shall be subject to sanctions in accordance with the relevant provisions of the PIA,” the circular stated.