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20 Jan

OIL AND GAS 2.2 PETROLEUM REFINERY AND PROCESSING PLANT

PETROLEUM REFINERY AND PROCESSING PLANT.

In commercial terms; refining is the process of improving the marketability of petroleum. It may include liquefaction of gas and separating crude oil…[1]Refining essentially involves subjecting the crude oil to a scientific process, which in the end produces products that can be marketed and distributed for our energy needs[2]. For this reason, refineries are constructed.

Refining is needed to make the crude oil consumable.

What we are looking at here is how one can legally establish a refinery in Nigeria. The useful laws here include: the Hydrocarbon Oil Refineries Act[3], Petroleum Act[4] and the Petroleum Refining Regulations.

Section 2 and 3 of the Local Content Act provides that Nigerian indigenous companies are to be accorded priority in granting refining license.

You cannot just wake up and build a multi-billion naira refinery in Nigeria. Section 3 of the Petroleum Act provides that no refinery shall be constructed or operated in Nigeria without a license granted by the minister[5].

Section 1 of the Hydrocarbon Oil Refineries Act[6]provides: Subject to the provisions of this Act, no person shall refine any hydrocarbon oils save in a refinery and under a licence issued under this Act (hereunder referred to as “a refiner’s licence”).

First: You conduct an Environmental Impact Assessment of how your activity is going to affect the environment.

Next: You apply for a “Refiner’s Licence”:

Section 2 of the Hydrocarbon Oil Refineries Act provides; An application for a refiner’s licence may be made by any person in the prescribed form and manner to the Nigerian Customs Service Board in respect of the premises mentioned in that behalf in the application.

The following should be attached to the application.

  • A detailed study and report of the proposed project.
  • An Environmental Impact Assessment report.
  • The requisite fees as determined under the Petroleum Refining (Amendment) Regulations, made from time to time by the Minister of Finance pursuant to Section 28 of Hydrocarbon Oils Refineries

The board would then consider the application and grant or refuse same.

Upon the grant of the licence, the licensee can commence the construction of the refinery subject to stipulated standards[7].

Next: After obtaining the refiner’s license and the construction of the refinery, the next thing to do is to Operate and Maintain the Oil Refinery. In doing so, certain standards and best practices must be complied with. Section 3 of the Hydrocarbon Oil Refineries Regulation 1965 mandates the licensee to refine in accordance with the provisions of the Act.

A refiner’s licence issued under this legislation shall remain in force, unless revoked, and shall continue to be used until 31st December next following the date of issue when it shall expire[8]. This means that the refiner’s licence does not confer a perpetual interest. The license can also be revoked by the board under various grounds as contained in Section 5(1) e.g. the holder ceases to refine the hydrocarbons for which the license was granted.

With the Establishment of Hydrocarbon Processing Plants (Petroleum Refinery and Petrochemicals) Regulations issued by the Department of Petroleum Resources in 2007, various regulations which should improve the licensing and refining regime in Nigeria are reflected therein.

[1] See Regulatoin 48 of the Petroleum Refinery regulations.

[2] National Open University course material on Oil and Gas.

[3] Cap H5 LFN 2004.

[4] Cap P10 LFN 2004.

[5] A similar stipulation can be found in Section 1 of the Hydrocarbon Act.

[6] Ibid.

[7] See Section 3 (2) of the Hydrocarbons Oil Refineries Regulation 1965

[8] See Section 6 HORAct.

Isochukwu

Quite eccentric really

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