WHAT THE NIGERIAN INSURANCE INDUSTRY REFORM ACT (NIIRA) 2025 MEANS FOR LIFE INSURANCE AND POLICYHOLDERS IN NIGERIA
August 7, 2026Introduction
Nigeria’s petroleum and energy industry is principally regulated by the “Petroleum Industry Act, 2021 (PIA)”, which repealed the Petroleum Act, Cap. P10, Laws of the Federation of Nigeria 2004. The PIA introduced a new legal and regulatory framework governing upstream, midstream and downstream petroleum operations. It also established two principal regulatory agencies:
- The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) responsible for upstream petroleum operations.
- The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) responsible for midstream and downstream petroleum operations.
Any person or company intending to engage in petroleum operations in Nigeria must obtain the relevant licenses, permits and approvals prescribed under the PIA and other applicable laws.
- PETROLEUM PROSPECTING LICENCE (PPL)
Meaning
A Petroleum Prospecting Licence (PPL) is the licence granted by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) authorizing a company to carry out petroleum prospecting operations within a specified area.
It replaced the former Oil Prospecting Licence (OPL) under the repealed Petroleum Act.
The PPL is governed principally by the Petroleum Industry Act, 2021, particularly Sections 70–77.
Purpose
A Petroleum Prospecting Licence authorizes the holder to:
- Explore for crude oil and natural gas;
- Carry out geological and geophysical surveys;
- Conduct seismic acquisition;
- Drill exploration wells;
- Appraise petroleum discoveries;
- Evaluate commercial viability of petroleum deposits.
The licence does not permit commercial production except where allowed under the appraisal programme authorized by the Commission.
Duration
Under the PIA:
The initial term is not more than six (6) years. It is divided into:
- Initial exploration period
- Optional renewal period subject to fulfillment of work
The holder must surrender portions of the licensed area as required under the Act.
Rights of the Holder
A PPL holder may:
- Enter the licence area.
- Conduct petroleum prospecting operations.
- Drill exploratory wells.
- Construct temporary facilities.
- Recover petroleum during testing.
- Apply for conversion to a Petroleum Mining Lease where a commercial discovery is made.
Obligations
The holder must:
- Pay rents and statutory fees.
- Comply with environmental regulations.
- Submit periodic technical reports.
- Maintain health and safety standards.
- Meet minimum work programme commitments.
- Comply with Nigerian Content requirements.
- Obtain environmental approvals where applicable.
Grant of PPL
The Commission grants the licence through:
- Competitive bidding rounds;
- Licensing rounds;
- Other methods permitted under the PIA.
The applicant must demonstrate:
- Technical competence;
- Financial capability;
- Corporate existence;
- Work programme;
- Environmental management plan. PETROLEUM MINING LEASE (PML)
Meaning
A Petroleum Mining Lease (PML) is granted where petroleum has been discovered in commercial quantities.
It authorizes the holder to undertake commercial production of petroleum.
The PML replaced the former Oil Mining Lease (OML) under the repealed Petroleum Act.
Its principal provisions are found in Sections 78–89 of the Petroleum Industry Act, 2021.
Purpose
A Petroleum Mining Lease authorises the holder to:
- Produce petroleum commercially.
- Develop oil fields.
- Construct production facilities.
- Process petroleum.
- Store petroleum.
- Transport petroleum within the lease area.
- Export petroleum subject to applicable laws.
Duration
Under the PIA:
The initial term is 20 years and it is renewable subject to statutory conditions.
Rights of Holder
The holder may:
- Produce crude oil.
- Produce natural gas.
- Operate production facilities.
- Install pipelines within the lease area.
- Sell petroleum.
- Export petroleum.
- Develop petroleum reservoirs.
Obligations
The holder must:
- Pay royalties.
- Pay rents.
- Pay taxes under applicable tax laws.
- Comply with host community obligations under the PIA.
- Implement environmental management plans.
- Submit annual production reports.
- Comply with decommissioning and abandonment obligations.
- Maintain insurance.
Conversion from Petroleum Prospecting Licence
Where commercial quantities of petroleum are discovered, the PPL holder may apply to the Commission for the grant of a Petroleum Mining Lease.
The Commission evaluates:
- Commercial viability.
- Development plan.
- Financial capability.
- Technical competence.
- Environmental compliance.
OTHER LICENCES REQUIRED IN NIGERIA:
The licence required depends on whether the company operates in the upstream, midstream, or downstream segment of the petroleum industry.
- PETROLEUM EXPLORATION LICENCE (PEL)
The Petroleum Exploration Licence (PEL) is provided for under the Petroleum Industry Act, 2021. It authorizes reconnaissance and exploratory activities over a defined area using non-invasive methods.
Activities include:
- Geological mapping;
- Geophysical surveys;
- Remote sensing;
- Gravity and magnetic surveys.
A PEL does not confer any exclusive right over the area and does not authorize drilling or production. If promising discoveries are made, the holder must apply for a Petroleum Prospecting Licence (PPL) to undertake drilling and further exploration.
- LICENCE TO ESTABLISH A REFINERY
This is issued by the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA).
It is required before constructing any refinery.
The applicant must provide:
- Engineering design;
- Feasibility study;
- Environmental approvals;
- Financing plan;
- Corporate documents.
Upon satisfactory completion of construction, the Authority may issue a Licence to Operate a Refinery.
- LICENCE TO CONSTRUCT A REFINERY
Before physical construction commences, the holder of the Licence to Establish must obtain approval to construct, subject to meeting detailed engineering, safety, and regulatory requirements prescribed by the NMDPRA and the applicable regulations.
- LICENCE TO OPERATE A REFINERY
This is issued after:
- Completion of construction;
- Successful inspection;
- Compliance with safety standards;
- Operational readiness.
The licence authorizes commercial refining operations.
- MIDSTREAM GAS PROCESSING LICENCE
This is required for:
- Gas processing plants;
- Natural gas liquids extraction;
- Gas treatment facilities.
It is issued by the NMDPRA.
- GAS TRANSPORTATION PIPELINE LICENCE
Required for:
- Construction;
- Ownership;
- Operation;
- Maintenance of gas transmission pipelines.
Issued by the NMDPRA under the PIA.
- GAS DISTRIBUTION LICENCE
Required for companies supplying gas to:
- Residential customers;
- Commercial users;
- Industrial consumers;
- Power plants.
Issued by the NMDPRA.
- CRUDE OIL TRANSPORTATION PIPELINE LICENCE
Required for the construction and operation of crude oil transportation pipelines.
Issued by the NMDPRA for midstream-related pipelines or the NUPRC for upstream-related pipelines.
- PETROLEUM STORAGE LICENCE
Required for storage facilities including:
- Tank farms;
- Bulk petroleum depots;
- Strategic storage facilities.
Issued by the NMDPRA.
- PETROLEUM PRODUCTS RETAIL LICENCE
Required for operating:
- Filling stations;
- Retail petroleum outlets;
- Service stations.
Issued by the NMDPRA.
- PETROLEUM PRODUCTS WHOLESALE LICENCE
Required for wholesale distribution of:
- Premium Motor Spirit (PMS);
- Automotive Gas Oil (AGO);
- Dual Purpose Kerosene (DPK);
- Aviation fuel;
- Liquefied Petroleum Gas (LPG), where applicable.
Issued by the NMDPRA
- PETROLEUM PRODUCTS IMPORT LICENCE
Required for importing petroleum products into Nigeria where applicable under prevailing government policy and the PIA.
Issued by the NMDPRA.
- PETROLEUM PRODUCTS EXPORT PERMIT
It is required before exporting petroleum products from Nigeria.
It is issued by the appropriate regulator, depending on the product and the applicable statutory framework.
- LIQUEFIED PETROLEUM GAS (LPG) PLANT LICENCE
It is required for:
- LPG bottling plants;
- LPG storage facilities;
- LPG dispensing facilities.
Issued by the NMDPRA.
- LUBRICANT BLENDING PLANT LICENCE
It is required for companies manufacturing lubricants.
Issued by the NMDPRA.
18. COMPRESSED NATURAL GAS (CNG) LICENCE
It is required for:
- CNG stations;
- CNG conversion centres;
- CNG distribution facilities.
Issued by the NMDPRA in accordance with the PIA and applicable regulations.
- LIQUEFIED NATURAL GAS (LNG) FACILITY LICENCE
It is required for:
- LNG liquefaction plants;
- LNG storage terminals;
- LNG loading facilities.
Issued by the NMDPRA.
- ELECTRICITY GENERATION LICENCE (WHERE APPLICABLE)
Where an energy company intends to generate electricity from natural gas or other sources for supply to third parties, it generally requires a Generation Licence issued by the Nigerian Electricity Regulatory Commission (NERC) under the Electricity Act, 2023, unless an exemption under that Act applies.
OTHER MANDATORY APPROVALS
Depending on the nature of the project, additional approvals commonly required include:
Environmental Impact Assessment (EIA) approval from the Federal Ministry of Environment under the Environmental Impact Assessment Act, Cap. E12, Laws of the Federation of Nigeria 2004.
Nigerian Content compliance under the Nigerian Oil and Gas Industry Content Development Act, 2010, regulated by the Nigerian Content Development and Monitoring Board (NCDMB).
Host Community Development Trust obligations under Chapter 3 of the Petroleum Industry Act, 2021 for applicable upstream operations.
Fire safety approvals from the Federal Fire Service or relevant State Fire Service, as applicable.
Development and building approvals from relevant planning authorities.
Tax registration with the Nigerian Revenue Service(NRS)
Registration with the Corporate Affairs Commission (CAC).
CONCLUSION
The Petroleum Industry Act, 2021 fundamentally restructured Nigeria’s petroleum licensing regime by replacing the former Oil Prospecting Licence (OPL) and Oil Mining Lease (OML) with the Petroleum Prospecting Licence (PPL) and Petroleum Mining Lease (PML). A PPL authorizes exploration and appraisal activities leading to the discovery of petroleum resources, while a PML authorizes their commercial development and production. Beyond these upstream titles, companies operating in the petroleum, oil and gas, and broader energy sectors must obtain additional licenses and permits appropriate to their activities in the midstream and downstream segments, together with environmental, Nigerian content, corporate, tax, and other regulatory approvals. Compliance with the Petroleum Industry Act, 2021 and the requirements of the NUPRC, NMDPRA, NERC, NCDMB, and other relevant authorities is essential for lawful operation within Nigeria’s energy industry.
KEY LEGAL AUTHORITIES
- Petroleum Industry Act, 2021 (especially Chapters 2 and 3 and the provisions governing petroleum titles, including PEL, PPL and PML).
- Nigerian Upstream Petroleum Regulatory Commission Act provisions within the PIA.
- Nigerian Midstream and Downstream Petroleum Regulatory Authority provisions within the PIA.
- Electricity Act, 2023.
- Nigerian Oil and Gas Industry Content Development Act, 2010.
- Environmental Impact Assessment Act, Cap. E12, Laws of the Federation of Nigeria 2004.
Note: A “Licence to Establish a Refinery” is distinct from a “Licence to Operate a Refinery”; construction and operation are regulated through staged approvals under the PIA and NMDPRA regulations.
The Author, Mr. Peter Akpu advises International oil Companies(IOC’s), Investors and lenders on petroleum and energy investment in Nigeria.
