OIL BLOCK ALLOCATIONS TO COMPANIES (BACK-IN-RIGHT) REGULATIONS, 2019

Regulations formalize the Federal Government's right to acquire equity in oil block allocations for petroleum development. They target oil companies and national petroleum entities to ensure state participation in resource management. This protects Nigeria's strategic interests in the oil industry.

What Is This Policy?

Regulations formalising the Federal Government's right to acquire an equity interest in any oil block allocated to a company, ensuring the state participates directly in petroleum development.

Who Does It Target?

Oil companies holding or bidding for oil blocks Nigerian National Petroleum Corporation (NNPC) Department of Petroleum Resources (now NUPRC) Local and international oil exploration companies

What Does It Aim to Achieve?

Protect the Nigerian state's strategic interest in petroleum resources, ensure government participation in oil block development, and regulate the exercise of the back-in right mechanism.

Key Features

Back-in Right Definition: Formalises the government's right to acquire up to a defined percentage equity stake in any oil block awarded to a private company. Trigger Conditions: Specifies the conditions under which the government may exercise its back-in right, including commercial discovery and development plan approval. Valuation Mechanism: Prescribes the methodology for valuing the equity interest acquired through the back-in right. NNPC Participation: NNPC is the designated vehicle through which the government exercises its back-in interest.

Current Status

Rollout Stage: Active Coverage: All oil block awards in Nigeria Beneficiaries: Federal Government and NNPC; Nigerian public through oil revenue Funding: NNPC state participation funding

How to Access

Oil companies must disclose all commercial discoveries to trigger back-in rights review Block allocation terms must include provisions for government back-in Companies must cooperate with NNPC valuation process Application method: Engage NUPRC and NNPC for oil block allocation processes.

Important Terms

Back-in right must be exercised within prescribed timelines after commercial discovery Failure to disclose a commercial discovery is a serious offence Back-in equity is acquired at a regulated cost, not market value

Official Resources

Website: https://www.nuprc.gov.ng Contact: Nigerian Upstream Petroleum Regulatory Commission (NUPRC)

Legal Framework

The Oil Block Allocations (Back-in-Right) Regulations operate under the Petroleum Industry Act 2021 and the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) regulatory authority. They operate alongside the Deep Offshore and Inland Basin PSC Amendment Act 2019 and the NNPC Incorporated Joint Venture agreements. Nigeria's obligations under the Africa Continental Free Trade Area (AfCFTA) investment chapter and the ECOWAS Energy Protocol provide the international framework.