The Oil and Gas Free Zones Authority (OGFZA) is the National Regulatory Agency established by the Federal Government of Nigeria through section 2 of the Oil and Gas Export Free Zones Act, No 8 of 29 March 1996, to regulate and manage Nigeria’s oil and gas export free trade zones. The Authority began regulatory operation in Onne, Rivers State, in 2000.
The first oil and gas export free zone to be established in the country was the Onne Oil and Gas Free Zone in Rivers State. Subsequently other oil and gas free zones were established as public-private partnerships between the Federal Government of Nigeria and private sector operators.
The history of the free zones is a record of the collaboration between the Federal Government (FG) some states, and private sector operators in the development of the logistic support base for the Oil and Gas Industry.
As has been documented by the Nigerian Ports Authority (NPA), Intels and other stakeholders, collaboration between the FG and private investors in port development and the building of the logistic base for the Oil and Gas Industry dates back to 1982 when the NPA invited private sector investors to operate at the Federal Lighter Terminal (FLT), which was the only partially completed section of the Onne Port Complex at the time. Nicotes (the predecessor of Intels) was one of eight companies that took up the invitation by NPA to operate out of Onne FLT. Only two of the eight companies, Brawal and Intels, continued to operate at Onne after two years.
With time Intels, inspired by best practices in other jurisdictions such as the North Sea and the Gulf of Mexico, domesticated the concept of “one-stop oil service centre” in some NPA-approved ports. The concept led to the rationalization of the logistic requirements for import and supply of equipment and maximised NPA’s revenue and control. The rationalised and integrated approach to the logistics of offshore exploration, development and production had a major cost saving effect for all parties involved in the Nigerian Oil and Gas Industry. The introduction of the concept of shared-facilities and services by all the major Oil Producing, Service and various related Oil & Gas companies drastically reduced operational costs to the NNPC and its partners.
For instance, it is obvious that locating the Transit and Supply base in existing NPA facilities helped to eliminate double handling and transshipment charges, reducing the risks of damage caused by multiple handling, thereby enhancing savings.
In 1988 the predecessor of Intels (Nicotes) obtained an initial five-year lease from NPA to operate its facilities at Onne Port Complex, Warri Old Port and Calabar New Port. This was part of the process of stepping up the logistic support for the Oil and Gas Industry.
The three ports, which had suffered underutilisation before the lease agreement, became strategic locations for the creation of integrated transit and supply bases and optimal Oil Service Centres.
In 1992, to meet the need for large and long-term investments required to boost the sector, the predecessor of Intels (Nicotes) applied for and was granted a 21-year extension of its leases at Onne Port Complex, Warri Port Complex and Calabar New Port. (These were part of the leases taken over by Intels upon the winding up of Nicotes, and were eventually consolidated into a single lease document between NPA and Intels in 2005, referred to as the Consolidated Lease.
In 1992, Government invited the Maritime Industry to participate in the needed investment to complete the development of the FOT. Intels answered the call and brought in a significant investment to complete the FOT. The project was further expanded after Intels injected significant investments in infrastructure, including the development of approximately 100,000 square metres stacking area and the refurbishment of warehouses and the partially completed quay apron, allowing the first vessels to be berthed at FOT in 1995.
In 1996, the Federal Government of Nigeria, in acknowledgment of the impressive development at Onne and to encourage further investments, particularly by way of foreign direct investment, declared Onne an Oil & Gas Free Zone under Decree No.8 of 1996.
OGFZA has begun the process of implementing the provisions of its enabling law and Federal Government directives ceding regulatory control of all Oil and Gas Free Zones in the country to OGFZA