Library / Midstream and Downstream Decommissioning and Abandonment Regulations Under Section 232 and 233 of the Petroleum Industry Act (2021). DRAFT DATE: 10/06/2022
Midstream and Downstream Decommissioning and Abandonment Regulations Under Section 232 and 233 of the Petroleum Industry Act (2021). DRAFT DATE: 10/06/2022
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Contributions to the fund 26.(1) The Fund shall be funded by the licencee based on the annual contributions to be calculated in the manner provided in these Regulations and contained in the decommissioning and abandonment plan. (2) The annual contribution provided for in the decommissioning and abandonment plan shall be in the United State Dollars (USD) and be based on an estimate by the licencee of the applicable decommissioning and abandonment costs, projected forward on a nominal basis; and divided by the estimated life of the facilities and the reasonable cost estimate shall be approved by the Authority. (3) The estimated life of the facilities referred to in Regulation 26 (2) shall be based on the – (a) estimated design life of facilities used for Midstream and Downstream petroleum operations; and (b) period of time for which the safe operations of the facilities were designed, in case of facilities used for midstream petroleum operations, which meet the condition of section 8(d) of the Act. (4) The estimates for costs required in these Regulations shall be made based on best international petroleum industry practice. (5) The annual contribution shall be deposited to the fund on or before 31st December of each calendar year. (6) The estimated annual contribution pursuant to Regulation 26(2) shall be reviewed every 10 years following the first submission. (7) Contributions to the decommissioning and abandonment fund shall be eligible for cost recovery and shall be tax deductible, provided that the cost of executing the decommissioning and abandonment programme disbursed from the Fund shall not be eligible for cost recovery or deductible for tax purposes. Uses of the fund 27. (1) The decommissioning and abandonment fund shall be exclusively used to pay for decommissioning and abandonment costs. (2) The licencee shall have access to the fund only upon receipt of the written approval from the Authority pursuant to these Regulations to undertake the decommissioning and abandonment programme and shall use such funds only for conducting approved decommissioning and abandonment plan. (3) Where there is an excess in the fund after the decommissioning and abandonment has been carried out and approved by the Authority, the excess shall be considered income for production sharing or tax purposes and the amount after the withholding of profit oil and any tax shall be returned to the licencee. (4) Where the fund is not sufficient to cover the decommissioning and abandonment expenditure, the licencee shall cover such difference to fulfil the obligations in full. 28. (1) Where a licencee fails to comply with the decommissioning and abandonment plan or decommissioning and abandonment programme, the decommissioning and abandonment fund shall be accessed by the Authority, to pay for the performance by a third party of such licencee’s obligations pursuant to section 232 of the Act.
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