OPL vs OML: Oil Production Licenses in Nigeria

Energy Map Nigeria

There are two types of Licenses issued to oil producers in Nigeria namely: the Oil Prospecting License (OPL) and the Oil Mining License (OML) with validity periods ranging from 5 to 20 years respectively.

All the Petroleum (Crude Oil) in Nigeria is vested in the Federal Government, whose sole responsibility it is to control the resources and only permit their exploitation under license, in accordance with the Petroleum Act 1969.

The State allocates acreages (Licenses) to operators in any such areas deemed to have potential for petroleum accumulation at the discretion of the Minister of Petroleum Resources. The allocations will be based on a set of criteria that would be made known to deserving companies at the time such blocks are open for bidding.

The State reserves the right to participate in the operations of any block and to determine the type of contractual arrangements between the Allotee(s) and the Government.

 

Oil Prospecting License (OPL)

This confers exclusive rights of surface and subsurface exploration for the production of petroleum in an area not more than 2590 km2. (1000 m2) in size. The OPL is granted in inland basins for an initial period of 3 years with the option of renewal for a maximum period of 2 years. For the deep water blocks and frontier basins the exploration period is ten (10) years, broken into two 5-year periods which automatically roll over unless otherwise withdrawn due to non-performance.

 

Oil Mining Lease (OML)

A Licensee who has fulfilled the work commitment according to Petroleum (Drilling and Production) Regulations of 1969 and the conditions otherwise applicable to the individual License may demand that the License be converted to an OML. An OML is granted upon confirmation of potential for commercial production of petroleum from the License. The OML grants exclusive rights to explore, win, produce and carry away petroleum from the relevant area. The regulation size is 1295 km2. (500 m2) and the specified duration is 20 years. Only the holder of an OPL is entitled to apply for conversion of Oil Prospecting License to an Oil Mining lease, through the Department of Petroleum Resources (DPR) for approval.

The production of 25,000 barrels per day is required as the minimum production level (commercial quantity) for conversion of a deep offshore OPL to an OML. However, for other areas, a production level of 10,000 barrels per day is required.

 

~Eastern Union Energy