Oil and Gas is the main source of income to Nigeria and 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 (\u201cDPR<\/strong><\/em>\u201d) on November 17, 2014 circulated the Guidelines and Procedures for Obtaining Minister\u2019s Consent to the Assignment of Interests in Oil and Gas Assets (the \u201cGuidelines<\/strong><\/em>\u201d) \u00a0for the purposes of establishing \u00a0the procedure for obtaining the consent of the Minister of Petroleum Resources (the \u201cMinister\u201d<\/strong><\/em>) to any assignment of any right, power or interest in an Oil Prospecting Licence (\u201cOPL<\/strong><\/em>\u201d), Oil Mining Lease (\u201cOML<\/strong><\/em>\u201d), Marginal Field (\u201cMF<\/strong><\/em>\u201d) or Oil and Gas Pipeline Licence (\u201cOGPL<\/strong><\/em>\u201d) as required under \u00a0the Petroleum Act Cap P10 Laws of the Federation of Nigeria (\u201cLFN<\/strong><\/em>\u201d) 2004 (\u201cPA<\/strong><\/em>\u201d) and the Oil Pipelines Act Cap O7 LFN 2004 (\u201cOPA<\/strong><\/em>\u201d).<\/p>\n THIS ID MADE AND SIGNED ON 11TH DAY OF AUGUST 2014 GUIDELINES AND PROCEDURES FOR OBTAINING MINISTER\u2019S CONSENT TO THE\u00a0ASSIGNMENT OF INTEREST IN OIL AND GAS ASSETS PURSUANT TO PARAGRAPHS 14-16\u00a0OF THE FIRST SCHEDULE TO THE PETROLEUM ACT CAP.P 10 LFN, 2004 AND SECTION 17\u00a0(5) (d) OF THE OIL PIPELINES ACT CAP. O7 LFN, 2004.<\/p>\n <\/p>\n <\/p>\n 1 PREAMBLE<\/strong> 1.2 The purpose of these Guidelines is to establish the procedure for obtaining the\u00a0consent of the Minister of Petroleum Resources to any assignment of any right,\u00a0power or interest in an Oil Prospecting Licence (OPL), Oil Mining Lease (OML) or\u00a0Marginal Field (MF) or Oil and gas Pipelines Licence (OGPL) in accordance with the\u00a0Petroleum Act and the Oil Pipelines Act.<\/p>\n 2.0 DEFINITION OF TERMS<\/strong> Assignor:<\/strong> The party wishing to dispose of asset or interest in asset by way of\u00a0assignment as defined in these Guidelines 3.0 WHAT CONSTITUTES AN ASSIGNMENT<\/strong> i. Assignment by way of exchange or transfer of shares: This shall entail\u00a0the acquisition of part or all of the shares of a company which holds an\u00a0OPL, OGPL, OML, or Marginal Field in Nigeria.<\/p>\n ii. Assignment by way of the private or public listing of a part or of the\u00a0whole of the shares of a company which holds an OPL, OGPL, OML, or\u00a0Marginal Field in a Stock Exchange anywhere in the world.<\/p>\n iii. Assignment by way of merger, wherein a company which holds an OPL,\u00a0OGPL, OML or marginal field combines with one or more companies to\u00a0form another company by way of payment, exchange of shares or by any\u00a0other means whatsoever.<\/p>\n <\/p>\n iv. Assignment by way of acquisition, wherein the acquiring company\u00a0directly or indirectly takes over or acquires the whole rights or interest in\u00a0a license or lease or marginal field and associated assets of the assigning\u00a0company, including acquisition of interest by an entity in a parent\u00a0company whose affiliate has interest in a licence, lease or marginal field\u00a0or associated assets in Nigeria.<\/p>\n v. Assignment to a company in a group of which the assignor is a member,\u00a0and is to be made for the purpose of re-organisation in order to achieve\u00a0greater efficiency and to acquire resources for more effective petroleum\u00a0operations.<\/p>\n vi. Assignment brought about by reason of devolution of ownership of\u00a0shares or interest in ownership of shares by way of operation of law and\u00a0testamentary device. Operation of law shall refer to a Judgment of a\u00a0competent court of law or an award from an Arbitration Panel.\u00a0Testamentary device shall refer to the transfer of shares through a Will,\u00a0Letters of Administration, or a Deed of Gift.<\/p>\n 4.0 PROCEDURE FOR AN ASSIGNMENT<\/strong> a) The holder of a Licence or Lease or a Marginal Field who is desirous of\u00a0assigning interest in the licence, lease or marginal field, in whole or in\u00a0part, or vesting any interest, power or rights therein on a third party,\u00a0shall notify the DPR prior to the commencement of the transaction and\u00a0shall not proceed with any process incidental to the transaction until so\u00a0authorised by DPR.<\/p>\n b) To this extent, the assigning party shall not advertise, publish or make\u00a0press release in respect of the assignment without the prior approval of\u00a0the DPR.<\/p>\n c) It shall be the responsibility of the assignor to secure the consent of the\u00a0Minister with respect to any assignment of interest in an asset.<\/p>\n 4.2 The notification to DPR shall state the reason for the proposed assignment, the\u00a0method for the conduct of the assignment, and the possible technical and\u00a0economic value such assignment would bring to the operation of the license or\u00a0lease.<\/p>\n 4.3 Where the assignment is to be carried out through an open bidding process\u00a0involving pre-qualification, technical and commercial stages, such procedure\u00a0shall be transparent and shall be outlined in the letter to the DPR regarding the\u00a0proposed transaction.<\/p>\n 4.4 Where the assignor intends to carry out such transaction through selective\u00a0tendering or negotiated transfer, such shall be made known to the DPR prior to\u00a0the commencement of the process.<\/p>\n <\/p>\n <\/p>\n 4.5 The assignor shall upon the completion of the technical evaluation of candidates\u00a0shortlisted for any transaction that may constitute an assignment, submit to the\u00a0DPR the list of such qualified candidates for preliminary due diligence to ensure\u00a0that any such company that may not otherwise be acceptable to the\u00a0Government of the Federal Republic of Nigeria is not allowed to proceed to the\u00a0commercial stage of the transaction. The cost of due diligence shall be borne by\u00a0the assignor.<\/p>\n 4.6 Where the assignor fails to submit to the DPR the list of technically qualified\u00a0candidates and proceeds to the commercial stage, such transaction shall not be\u00a0eligible for the Consent of the Minister under these Guidelines and the\u00a0Petroleum Act.<\/p>\n 4.7 The assignor shall not impose on the assignee, crude sale\/purchase agreement\u00a0as a condition for the consummation of the transaction, and any other\u00a0conditions that will serve as an impediment to the takeover and\/or operation of\u00a0the asset in a businesslike manner.<\/p>\n 4.8 The DPR shall, as part of its due diligence, consider the pricing of the asset to\u00a0ensure that there is no adverse effect on the revenue of the Federation.\u00a0Ordinarily, reference value of the asset should be the book value.<\/p>\n 4.9 The assignor shall not impose Domestic Gas Supply Obligations (DGSO) volumes\u00a0on the assignee without DPR\u2019s authorization. Any unauthorised imposition of\u00a0DGSO volumes shall be set aside by DPR.<\/p>\n 4.10 Where the assignor is in a Joint Venture arrangement involving the Nigerian\u00a0National Petroleum Corporation in respect of which a Joint Operating\u00a0Agreement is in place, the application of the assignor for the consent of the\u00a0Minister must be accompanied by a letter of waiver of right of pre-emption by the non-assigning parties in the Joint Venture as provided for in the Joint\u00a0Operating Agreement.<\/p>\n 4.11 Where the assignor is in a Production Sharing Contract arrangement as\u00a0Contractor or a member of the Contractor Party to the Nigerian National\u00a0Petroleum Corporation (NNPC) as the Concessionaire of an asset, the\u00a0application of the assignor for the consent of the Minister shall be accompanied\u00a0by a letter from the Nigerian National Petroleum Corporation acceding to the\u00a0assignment as may be provided for in the Production Sharing Contract\u00a0Agreement.<\/p>\n 4.12 Where the right of pre-emption is contained in the Production Sharing Contract\u00a0Agreement involving a Contractor Party, a letter from the other members of the\u00a0Contractor Party, waiving their right of pre-emption shall accompany the\u00a0application for the consent of the Minister.<\/p>\n 4.13 Where the assignor is the operator in an asset in which the NNPC is either a\u00a0Joint Venture partner or Concessionaire, the assignor shall not purport to\u00a0transfer the right of operatorship to the assignee and shall therefore not make\u00a0the right of operatorship a part of the commercial consideration in the\u00a0transaction.<\/p>\n 4.14 In accordance with the provisions of Nigerian Oil and Gas Industry Content\u00a0Development Act, 2010, Nigerian indigenous companies shall be given first\u00a0consideration in any assignment and this provision shall be taken into\u00a0consideration by the DPR in granting the approval for the commencement of\u00a0any divestment of interest in asset in the country. Therefore, the divesting party 4.15 Where the assignment involves a sole risk asset, not more than 40% of the\u00a0overall interest in the asset can be assigned to a foreign entity except that in the\u00a0case of marginal field, where the total interest assignable to a foreign entity is\u00a0pegged at 49% of the total overall interest in the asset.<\/p>\n 4.16 Where the parent company of a company holding interest in an asset in Nigeria\u00a0is taken over by or merged with another company overseas, the veil of\u00a0incorporation shall be lifted in such circumstance to determine if such\u00a0transaction constitutes an assignment under the Petroleum Act.<\/p>\n 4.17 Upon meeting all the required conditions set out in this Guideline and a\u00a0transaction is consummated leading to the execution of a Sales Purchase\u00a0Agreement (SPA) between the assignor and assignee , all proceeds from the\u00a0interest being transferred must from the date of the SPA be paid into an Escrow\u00a0Account to be opened by the assignor pending the procurement of the consent\u00a0of the Minister on the transfer.<\/p>\n <\/p>\n <\/p>\n 5.0 APPLICATION FOR CONSENT<\/strong> 5.2 The Applicant shall attach the following documents in triplicate:
\nSIGNED BY: DIRECTOR OF PETROLEUM RESOURCES<\/p>\nGet: Company formation or Registration Service in Nigeria<\/a><\/span><\/h1>\n
\n1.1 These Guidelines are issued pursuant to the provisions of Paragraph 14 \u2013 16 of the\u00a0First Schedule to the Petroleum Act,Cap P10 LFN, 2004 and section 17 (5) (d) of\u00a0the Oil Pipelines Act, CAP. O7 LFN 2004<\/p>\n
\nAsset means the generality of the surface facilities and sub surface resources\u00a0in an OPL, OML or Marginal field.<\/p>\n
\nAssignee:<\/strong> The party who is a recipient of an asset or interest in an asset\u00a0disposed of by way of assignment as defined in these Guidelines.
\nDPR<\/strong> means Department of Petroleum Resources.
\nInterest in a licence or lease<\/strong> means any arrangement such as PSC, PSA,\u00a0farm-in or farm-out agreement, sale, purchase, mortgage or other business\u00a0arrangements by which a right, privilege, power, benefit, gain or advantage in\u00a0a licence or lease is transferred to or conferred either directly or indirectly on a\u00a0third party.<\/p>\n
\n3.1 Assignment as used herein involves the transfer of a licence, lease or marginal\u00a0field or an interest, power or right therein by any company with equity,\u00a0participating, contractual or working interest in the said OPL, OML or marginal\u00a0field in Nigeria, through merger, acquisition, take-over, divestment or any such\u00a0transaction that may alter the ownership, equity , rights or interest of the\u00a0assigning company in question, not minding the nature of upstream\u00a0arrangement that the assigning company may be involved in, including but not\u00a0limited to Joint Venture (JV), Production Sharing Contract (PSC), Service\u00a0Contract, Sole Risk (SR) or Marginal Fields operation. Instances of an\u00a0assignment shall include but not limited to the following:<\/p>\nRead: Steps & Permits You to Start Oil & Gas Business in Nigeria<\/span><\/a><\/h1>\n
\n4.1 Pursuant to the provisions of Paragraph 14 of the First Schedule to the Petroleum\u00a0Act, CAP P 10 LFN, 2004 and Section 17 (5) (d), of Oil Pipelines Act CAP. O7, 2004,\u00a0prior consent of the Minister of Petroleum Resources is required before the
\nholder of licence or lease assigns his licence or lease, or any right, power or\u00a0interest in it. Thus:<\/p>\nGet: Debt Recovery\/ Collection Service in Nigeria<\/span><\/a><\/h1>\n
\nmust include the plan for effecting this aspect of the Act in the divestment\u00a0process.<\/p>\nRead: How to Obtain Your Company Tax Clearance in Nigeria<\/span><\/a><\/h1>\n
\n5.1 An Applicant shall submit a written application to the Director of Petroleum\u00a0Resources requesting the Minister\u2019s consent.<\/p>\n
\ni. Deed of Assignment,
\nii. Copy of existing Joint Operating Agreement (JOA) or Production\u00a0Sharing Contract (PSC) where applicable,
\niii. Farm\u2013in Agreement between the Assignor and Assignee,
\niv. Catalog of Applicant\u2019s Exploration and Production activities carried out\u00a0in the asset to date,
\nv. Assignee technical and financial track records in Exploration &\u00a0Production operations,
\nvi. The Assignee\u2019s incorporation documents,
\nvii. Technical Service Agreement,
\nviii. Sales Purchase Agreement (SPA),
\nix. In case of an assignment by way of private or public listing in a Stock\u00a0Exchange, the approvals, documents and rules governing such listing in\u00a0any of the stock exchanges involved,
\nx. In case of a Merger or acquisition involving a Publicly or Privately\u00a0quoted Company, a copy of the approvals, documents and rules
\ngoverning such Mergers and Acquisitions in all the relevant approving\u00a0jurisdiction.
\nxi. In case of an assignment as a result of Operation of Law, the applicant\u00a0shall give details of the Court Judgment and or the details of the legal\u00a0administration of the estate or Will or Deed of Gift.
\nxii. A bank draft, written in favour of FGN\/DPR Fees Account, for the sum\u00a0of N500, 000 for an assignment in an OPL or OGPL or OML and N50,\u00a0000 for an assignment of interest in a Marginal field.<\/p>\n