NMDPRA Promises Sanctions on Oil Companies Operating in Free Trade Zones Without Permits

The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) has issued a warning that oil and gas companies operating in free trade zones, export processing zones, and other designated areas without the required licences or permits will face sanctions under the Petroleum Industry Act (PIA) 2021.

In a circular signed by the agency’s Acting Chief Executive, Abiodun Adeniji, the regulator emphasized that no operator engaged in midstream or downstream petroleum activities is exempt from its oversight, regardless of location.

The circular, addressed to managing directors and chief executives of midstream and downstream oil and gas firms, petrochemical and fertiliser companies, and oil import and export terminal operators, reiterated that the NMDPRA remains the statutory regulator for technical, commercial, operational, and licensing matters in the sector under the PIA.

According to the NMDPRA, its mandate covers all midstream and downstream petroleum operations across Nigeria, including the continental shelf, territorial waters, exclusive economic zone, industrial zones, free zones, and export processing zones.

The authority clarified that all petroleum activities involving refining, processing, storage, bulk transportation, pipelines, gas transportation networks, terminals, jetties, wholesale supply, importation, exportation, distribution, and sales of petroleum products and natural gas remain subject to its oversight.

It specifically warned that operators within free zones and similar designated areas cannot claim exemption from compliance with the PIA and its regulations.

The regulator further stressed that no individual or company may establish, construct, or operate any midstream or downstream petroleum facility without obtaining the appropriate licence, permit, or authorisation from the authority.

Additionally, the NMDPRA cited Section 48(1) of the PIA, noting that any ministry, department, or agency whose actions may affect midstream and downstream petroleum operations must first consult the authority before issuing regulations, guidelines, enforcement directives, or taking actions related to the sector.

The circular states that the authority reserves the right to review recommendations from such government institutions and communicate its decision, which must subsequently be complied with.

The regulator also referenced Section 309 of the PIA, which provides that where provisions of any other law conflict with the PIA, the provisions of the petroleum law will prevail.

“In view of the foregoing, any person engaging in midstream and downstream petroleum operations without an appropriate licence, permit, or authorisation from the Authority shall be subject to sanctions in accordance with the relevant provisions of the PIA,” the circular stated.

This directive is expected to increase regulatory scrutiny in Nigeria’s oil and gas sector, particularly in free trade and export processing zones where some operators have historically claimed varying regulatory exemptions.

“The operation of any midstream or downstream petroleum facility within a free zone, export processing zone or similar area does not exempt such a facility and its operations from compliance with the provisions of the PIA and regulations made thereunder,” the organisation maintained. “No person shall establish, construct, operate or undertake any midstream or downstream petroleum activity except with an appropriate licence, permit or authorisation granted by the Authority in accordance with the PIA.”