Library / Page 1 of 67 MIDSTREAM AND DOWNSTREAM PETROLEUM SAFETY AND ENVIRONMENTAL REGULATIONS, 2025
Page 1 of 67 MIDSTREAM AND DOWNSTREAM PETROLEUM SAFETY AND ENVIRONMENTAL REGULATIONS, 2025
Page 50 of 67
Page 50 of 67 103. (1) There shall be established for each licence (where a facility requires decommissioning and abandonment) a Decommissioning and Abandonment Fund (“Fund”), not later than 120 days from the date of commencement of operations in the case of a new licence, or one year from the effective date of these Regulations for existing licences in midstream and downstream petroleum operations. (2) The Fund shall be established by the licensee in respect of petroleum operations under the licence, for the purpose of fulfilling its obligations and liabilities with respect to decommissioning and abandonment under a Plan. (3) A licensee shall notify the Authority in writing of the establishment of the Fund under sub- regulation (1) not later than 14 days from the date of establishment of the Fund. (4) The Fund shall be in the form of an escrow account held by a financial institution that is not an affiliate of the licensee. (5) The Authority shall be a party to the escrow agreement in respect of the escrow account in sub-regulation (4) and shall have access to the funds in the escrow account under the provisions of this regulation. (6) The escrow account shall be kept free from any encumbrance from creditors, including a charge, pledge, guarantee or a letter of credit. (7) The financial institution under sub-regulation (4) shall be a Tier 1 commercial bank licensed by the Central Bank of Nigeria and shall pass stress tests conducted by the Central Bank of Nigeria on a semi-annual basis for the entire life of the decommissioning and abandonment escrow, and where the financial institution fails to meet the stress test, the funds in the escrow account shall be transferred within three months to an escrow account in another financial institution that meets the stress test. (8) The financial institution referred in sub-regulation (7) shall be domiciled in Nigeria and the escrow account shall be interest-bearing with any accrued interest being part of the Fund. (9) The revocation or cancellation of a licence shall terminate the licensee’s interests, rights and access to the escrow account and the Authority shall have sole and exclusive access and control over the escrow account to the exclusion of any other person. Establishing a decommissioning and abandonment fund 104. (1) A holder of a petroleum prospecting licence or petroleum mining lease who has established a decommissioning and abandonment fund that applies to midstream designated facilities that ordinarily may have been the subject of these Regulations shall — (a) Apply to the Authority to be exempted from establishing a fund for the midstream designated facilities; and (b) submit an annual report of its decommissioning and abandonment activities in respect of the midstream designated facilities accompanied by the audited accounts of the fund to the Authority, not later than 31st May of the particular year. Exemption to establishing a decommissioning and abandonment fund
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